-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TwFBTJhnOPzsTuUuZETBhSZFUhaP2YZ9bgUqJeggyde/ZwyGlyBvUXc2vbVMk/VK 54wwV0Jx7GR7SiXZBmOdRw== 0001029869-98-000961.txt : 19980729 0001029869-98-000961.hdr.sgml : 19980729 ACCESSION NUMBER: 0001029869-98-000961 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980513 ITEM INFORMATION: FILED AS OF DATE: 19980727 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STOCKER & YALE INC CENTRAL INDEX KEY: 0000094538 STANDARD INDUSTRIAL CLASSIFICATION: OPTICAL INSTRUMENTS & LENSES [3827] IRS NUMBER: 042114473 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-27372 FILM NUMBER: 98671877 BUSINESS ADDRESS: STREET 1: 32 HAMPSHIRE ROAD CITY: SALEM STATE: NH ZIP: 03079 BUSINESS PHONE: 6038938778 8-K/A 1 LASIRIS INC. EDGAR FORM 8-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 13, 1998 STOCKER & YALE, INC. (Exact name of Registrant as specified in its charter) Massachusetts 0-5460 04-2114473 (State or other jurisdiction (Commission File (I.R.S. Employer of incorporation) Number) Identification No.) 32 Hampshire Road, Salem, New Hampshire 03079 (Address of principal executive offices and zip code) Registrant's telephone number, including area code: (603) 893-8778 The undersigned Registrant hereby amends Item 7 of its Current Report on Form 8-K filed May 27, 1998 to read in its entirety as follows: Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements of Business Acquired. Financial Statements for Lasiris Inc. are filed with this report as Attachment A. (b) Pro Forma Financial Information. Pro forma Financial Information for the Registrant is filed with this report as Attachment B. (c) Exhibits *2.1 Offer of Purchase and Sale by and among Stocker & Yale, Inc., Lasiris, Inc., the stockholders of Lasiris, Inc. and certain other parties named therein, dated March 14, 1998. *10.1 Voting, Support and Exchange Agreement between Lasiris Holding, Inc., Stocker & Yale, Inc. and the stockholders of Lasiris, Inc. and certain other parties named therein, dated as of May 13, 1998. *10.2 Employment Agreement by and among Lasiris, Inc., Stocker & Yale, Inc. and Alain Beauregard, dated as of May 13, 1998. *10.3 Employment Agreement by and among Lasiris, Inc., Stocker & Yale, Inc. and Luc Many, dated as of May 13, 1998. *10.4 Lasiris, Inc. Executive Incentive Compensation Plan - ---------------------- * Previously filed. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. STOCKER & YALE, INC. (Registrant) By: /s/ Susan A. H. Sundell -------------------------------- Date: July 27, 1998 Susan A. H. Sundell Senior Vice President, Finance 3 EXHIBIT INDEX ------------- *2.1 Offer of Purchase and Sale by and among Stocker & Yale, Inc., Lasiris, Inc., the stockholders of Lasiris, Inc. and certain other parties named therein, dated March 14, 1998. *10.1 Voting, Support and Exchange Agreement between Lasiris Holding, Inc., Stocker & Yale, Inc. and the stockholders of Lasiris, Inc. and certain other parties named therein, dated as of May 13, 1998. *10.2 Employment Agreement by and among Lasiris, Inc., Stocker & Yale, Inc. and Alain Beauregard, dated as of May 13, 1998. *10.3 Employment Agreement by and among Lasiris, Inc., Stocker & Yale, Inc. and Luc Many, dated as of May 13, 1998. *10.4 Lasiris, Inc. Executive Incentive Compensation Plan - ----------------------- * Previously filed. 4 ATTACHMENT A ------------ | Coopers | Laliberte | & Lybrand | Lanctot - -------------------------------------------------------------------------------- Lasiris Inc. Financial Statements For the period from February 1, 1997 to December 31, 1997 and for the year ended January 31, 1997 (expressed in Canadian dollars) - -------------------------------------------------------------------------------- | Coopers | Laliberte | chartered accountants | telephone: (514) 876-1500 | & Lybrand | Lanctot | | fax : (514) 876-1502 | | | Le Windsor | | | | 1170 Peel Street | | | | Montreal, Quebec | | | | Canada HSB 4T2 | March 27, 1998 Auditors' Report To the Directors of Lasiris Inc. We have audited the balance sheets of Lasiris Inc. as at December 31, 1997 and January 31, 1997 and the statements of earnings, retained earnings and changes in financial position for the period from February 1, 1997 to December 31, 1997 and for the year ended January 31, 1997. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards in Canada. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the company as at December 31, 1997 and January 31, 1997 and the results of its operations and the changes in its financial position for the period and the year then ended respectively in accordance with generally accepted accounting principles in Canada. Coopers & Lybrand Chartered Accounts General Partnership Lasiris Inc. Balance Sheets as at December 31, 1997 and January 31, 1997 - -------------------------------------------------------------------------------- (expressed in Canadian dollars)
December 31, January 31, 1997 1997 $ $ Assets Current assets Cash and term deposits (note 2) -- 10,845 Accounts receivable (notes 2 and 3) 1,285,568 807,625 Research and development tax credits 235,384 216,452 Supplies inventory (note 2) 857,662 429,253 Prepaid expenses 18,149 15,604 --------------- --------------- 2,396,763 1,479,779 Capital assets (notes 4 and 5) 276,839 162,818 --------------- --------------- 2,673,602 1,642,597 =============== =============== Liabilities Current liabilities Bank advances (note 2) 216,491 -- Accounts payable and accrued liabilities 902,988 661,806 Income taxes 226,538 98,000 Current portion of long-term debt 50,000 96,672 Current portion of deferred government assistance 1,925 2,046 --------------- --------------- 1,397,942 858,524 Long-term debt (note 5) 50,000 -- Deferred government assistance (note 6) 10,909 12,834 Deferred income taxes 45,500 31,500 --------------- --------------- 1,504,351 902,858 --------------- --------------- Commitments (note 10) Shareholders' Equity Capital stock (note 7) 272,890 272,890 Contributed surplus (note 7) -- 49,660 Retained earnings 896,361 417,189 --------------- --------------- 1,169,251 739,739 --------------- --------------- 2,673,602 1,642,597 =============== ===============
See accompanying notes to the financial statements. - -------------------------------------------------------------------------------- Lasiris Inc. Statements of Retained Earnings For the period from February 1, 1997 to December 31, 1997 and for the year ended January 31, 1997 - -------------------------------------------------------------------------------- (expressed in Canadian dollars)
December 31, January 31, 1997 1997 $ $ (eleven (twelve months) months) Balance-- Beginning of period 417,189 15,231 Net earnings for the period 567,512 401,958 --------------- --------------- 984,701 417,189 Redemption of a stock option to purchase Class A shares (note 7) 88,340 -- --------------- --------------- Balance-- End of period 896,361 417,189 =============== ===============
See accompanying notes to the financial statements. - -------------------------------------------------------------------------------- Lasiris Inc. Statements of Earnings For the period from February 1, 1997 to December 31, 1997 and for the year ended January 31, 1997 - -------------------------------------------------------------------------------- (expressed in Canadian dollars)
December 31, January 31, 1997 1997 $ $ (eleven (twelve months) months) Revenue Research contracts, laser-based structured light and holographic products 5,265,585 3,417,938 --------------- --------------- Operating expenses 2,980,787 1,888,039 Research and development costs -- net of tax credits and grants of $227,635 (January 31, 1997 - $236,483) 231,451 144,014 --------------- --------------- 3,212,238 2,032,053 --------------- --------------- Gross Profit 2,053,347 1,385,885 --------------- --------------- Expenses Selling and administrative expenses 1,237,400 832,619 Financial charges less income 9,435 21,808 --------------- --------------- 1,246,835 854,427 --------------- --------------- Earnings before income taxes 806,512 531,458 --------------- --------------- Provision for income taxes (note 9) Current 225,000 98,000 Deferred 14,000 31,500 --------------- --------------- 239,000 129,500 --------------- --------------- Net Earnings for the period (note 8) 567,512 401,958 =============== ===============
See accompanying notes to the financial statements. - -------------------------------------------------------------------------------- Lasiris Inc. Statements of Changes in Financial Position For the period from February 1, 1997 to December 31, 1997 and for the year ended January 31, 1997 - -------------------------------------------------------------------------------- (expressed in Canadian dollars)
December 31, January 31, 1997 1997 $ $ (eleven (twelve months) months) Operating activities Net earnings for the period 567,512 401,958 Items not affecting cash-- Amortization of capital assets 42,798 27,216 Amortization of government assistance (2,046) (6,676) Deferred income taxes 14,000 31,500 --------------- --------------- 622,264 453,998 Net change in non-cash operating working capital balances (558,109) (355,546) --------------- -------------- Cash provided by operating activities 64,155 98,452 --------------- --------------- Financing activities Increase (decrease) in long-term debt 3,328 (140,650) Redemption of a stock option to purchase Class A shares (138,000) -- --------------- --------------- Cash used in financing activities (134,672) (140,650) --------------- -------------- Investing activities Purchase of capital assets and cash used in investing activities (156,819) (56,846) --------------- -------------- Decrease in cash (227,336) (99,044) Cash and term deposits - Beginning of period 10,845 109,889 --------------- --------------- Cash and term deposits (bank advances) - End of period (216,491) 10,845 =============== ===============
See accompanying notes to the financial statements. - -------------------------------------------------------------------------------- Lasiris Inc. Notes to Financial Statements For the period from February 1, 1997 to December 31, 1997 and for the year ended January 31, 1997 - -------------------------------------------------------------------------------- (expressed in Canadian dollars) 1. Significant accounting policies Management estimates The preparation of financial statements in accordance with generally accepted accounting principles requires the utilization of estimates that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, at the balance sheet date and the reported amounts of revenue and expenses. Actual results could differ from those estimates. Fair value of financial instruments The company has estimated the fair value of its financial instruments based on current interest rates, related market values and current pricing of financial instruments with comparable terms. The carrying value of these financial instruments, such as cash and term deposits, accounts receivable, the excess of outstanding cheques over the bank balances and the accounts payable and accrued liabilities, approximates their fair values, unless otherwise indicated. Supplies inventory Supplies inventory is carried at the lower of cost determined on a first-in, first-out basis and market value. Market value is defined as replacement cost. Capital assets Capital assets are amortized on the declining balance method at the rate of 20% for office furniture and equipment and 15% for optical material and research equipment. Licenses and leasehold improvements are amortized on a straight-line basis over five years. Income taxes The company accounts for income taxes using the deferral method of tax allocation. Under this method, timing differences between accounting income and taxable income give rise to deferred income taxes. They are not adjusted for subsequent changes in income tax rates. Research and development costs and marketing expenses All research and development costs and marketing expenses are expensed during the period in which they are incurred. Government assistance Government assistance for capital assets is amortized at the respective rates of the related capital assets. In addition, government assistance for research and development and current expenses for the period is recorded as a reduction of the related expenses. Foreign currency translation Monetary assets and liabilities in foreign currencies are translated at year-end rates. Revenue and expenses are translated at the rates prevailing at the transaction dates. Gains and losses arising on translation are included in earnings for the period. 1 Lasiris Inc. Notes to Financial Statements For the period from February 1, 1997 to December 31, 1997 and for the year ended January 31, 1997 - -------------------------------------------------------------------------------- (expressed in Canadian dollars) 2. Collateral for bank advances The company has a line of credit of $500,000 bearing interest at prime plus 2%. Supplies inventory, a hypothecation of all accounts receivable and other movables and a term deposit of $4,461 have been pledged as collateral for bank advances. 3. Accounts receivable
December 31, January 31, 1997 1997 $ $ Trade 1,203,872 692,173 Other 81,696 56,034 Government assistance -- 59,418 --------------- --------------- 1,285,568 807,625 =============== ===============
4. Capital Assets
December 31, January 31, 1997 1997 ---------------------------------------------------- --------------- Accumulated Cost amortization Net Net $ $ $ $ Licenses 14,916 8,192 6,724 5,950 Office furniture and equipment 103,058 36,004 67,054 33,992 Optical material 372,687 215,357 157,330 113,422 Research equipment 43,253 4,875 38,378 -- Leasehold improvements 10,504 3,151 7,353 9,454 -------------- ---------------- --------------- --------------- 544,418 267,579 276,839 162,818 ============== ================ =============== ===============
2 Lasiris Inc. Notes to Financial Statements For the period from February 1, 1997 to December 31, 1997 and for the year ended January 31, 1997 - -------------------------------------------------------------------------------- (expressed in Canadian dollars) 5. Long-term debt (a) Long-term debt consists of the following:
December 31, January 31, 1997 1997 $ $ Bank loan bearing interest at prime plus 1.75% capital payable in 24 equal payments of $4,167 starting January 17, 1998 100,000 -- Participating loan from the Societe de developpement industriel du Quebec -- 96,672 --------------- --------------- 100,000 96,672 Less: Current portion 50,000 96,672 --------------- --------------- 50,000 -- =============== ===============
(b) Equipment is pledged as collateral for the bank loan. 6. Deferred government assistance
December 31, January 31, 1997 1997 $ $ Relating to capital assets, less accumulated amortization 12,834 14,880 Less: Current portion 1,925 2,046 --------------- --------------- 10,909 12,834 =============== ===============
7. Capital stock Authorized -- Unlimited number of the following classes of shares, without nominal value- Class A, voting and participating Class B, non-voting and non-participating, 8% non-cumulative and non-preferential dividend, retractable at their paid-in value Class C, non-voting and non-participating, 8% non-cumulative and preferential dividend to Class A and B, redeemable at their paid-in value plus the amount of the accumulated premium payable upon full redemption Issued and fully paid --
December 31, January 31, 1997 1997 $ $ 161,670 Class A shares 272,890 272,890 =============== ===============
3 Lasiris Inc. Notes to Financial Statements For the period from February 1, 1997 to December 31, 1997 and for the year ended January 31, 1997 - -------------------------------------------------------------------------------- (expressed in Canadian dollars) As a result of obtaining participating loans in the past, the company granted the lender a stock option for a maximum of 20,204 Class A shares. During the period, the company redeemed this stock option to purchase Class A shares in exchange for $138,000 cash. The redemption price of this option has been recorded as a reduction of contributed surplus and retained earnings in the amounts of $49,660 and $88,340 respectively. 8. Net earnings for the period Net earnings for the period include the following expenses:
December 31, January 31, 1997 1997 $ $ (eleven (twelve months) months) Amortization of capital assets 42,798 27,216 =============== =============== Amortization of government assistance (2,046) (6,676) =============== ============== Interest on long-term debt 1,986 14,026 =============== ===============
9. Income taxes The income tax rate differs from the basic rate due to the following:
December 31, January 31, 1997 1997 % % Basic federal and provincial combined rate 38.0 38.0 Manufacturing and processing income deduction (3.9) (1.9) Small business deduction (3.6) (6.0) Non-taxable items -- (3.4) Other (0.9) (2.3) --------------- --------------- 29.6 24.4 =============== ===============
10. Commitments The company's commitments under a long-term operating lease for premises amount to $288,067. Under the terms of the lease, annual rental payments for the next four years are as follows: 1998 $ 70,841 1999 83,867 2000 84,227 2001 49,132 4 Lasiris Inc. Notes to Financial Statements For the period from February 1, 1997 to December 31, 1997 and for the year ended January 31, 1997 - -------------------------------------------------------------------------------- (expressed in Canadian dollars) 11. Credit Risk The company continually monitors its clients' credit. It establishes the provision for doubtful accounts based on the credit risk applicable to each client. Management believes that there is non-significant credit risk as at December 31, 1997. 12. United States accounting principles The financial statements have been prepared in accordance with accounting principles generally accepted in Canada ("Canadian GAAP"). In certain respects, Canadian GAAP differs from accounting principles generally accepted in the United States ("U.S. GAAP"). Net earnings and shareholders' equity (a) Under U.S. GAAP, the redemption of the stock option should be recorded as an expense in the year. This difference in GAAP would result in a decrease of $138,000 to reported net earnings for the period ended December 31, 1997. There would be no changes to the total amount of shareholders' equity. (b) Under Canadian GAAP, the company follows the deferral method of providing for income taxes while under U.S. GAAP, the liability method would be used. Under this method, deferred income taxes are calculated based on the difference between accounting and tax values of assets and liabilities. The current tax rate is used to calculate deferred income taxes at the balance sheet date. This difference in GAAP would not result in a material change to the company's financial statements. Cash flows (c) Under U.S. GAAP, the following amounts would be reported:
Period ended Year ended December 31, January 31, 1997 1997 $ $ (eleven (twelve months) months) Net cash provided by (used in): Operating activities 64,155 98,452 Financing activities 101,961 (135,532) Investment activities (156,819) (56,846) -------------- --------------- Net increase (decrease) in cash 9,297 (93,926) =============== =============== Cash - End of period 20,798 11,501 =============== ===============
(d) Under U.S. GAAP, the definition of cash in the statement of cash flows would exclude short-term deposits with original maturities of more than three months and bank indebtedness which amounted to $4,462 and $241,751 respectively as at December 31, 1997 (January 31, 1997 - $4,462 and $5,118). Under U.S. GAAP, changes in short-term deposits with original maturities of more than three months would be disclosed as an investment activity and changes in bank indebtedness would be disclosed as a financing activity. 5 Lasiris Inc. Notes to Financial Statements For the period from February 1, 1997 to December 31, 1997 and for the year ended January 31, 1997 - -------------------------------------------------------------------------------- (expressed in Canadian dollars) (e) Canadian GAAP allows the disclosure of subtotal of the amount of cash provided by operating activities before cash provided by non-cash operating working capital items. U.S. GAAP requires a statement of cash flows without subtotal. (f) The net change in non-cash operating working capital balances is as follows:
Period ended Year ended December 31, January 31, 1997 1997 $ $ (eleven (twelve months) months) Decrease (increase) in: Accounts receivable (477,943) (444,892) Research and development tax credit (18,932) (34,805) Supplies inventory (428,409) (179,586) Prepaid expenses (2,545) 19,817 Increase in: Accounts payable and accrued liabilities 241,182 185,920 Income taxes 128,538 98,000 --------------- --------------- (558,109) (355,546) ============== ==============
6 Lasiris Inc. Notes to Financial Statements For the period from February 1, 1997 to December 31, 1997 and for the year ended January 31, 1997 - -------------------------------------------------------------------------------- (expressed in Canadian dollars) Other disclosure (g) The disclosure of the following amounts is required under U.S. GAAP:
Period ended Year ended December 31, January 31, 1997 1997 $ $ (eleven (twelve months) months) Payments under operating lease 55,997 54,614 Interest paid 4,328 14,026 Income taxes paid 100,138 -- December 31, January 31, 1997 1997 $ $ Trade accounts receivable 1,203,872 669,494 Allowance for doubtful accounts -- -- Other accounts receivable 81,696 138,131 --------------- --------------- 1,285,568 807,625 =============== =============== Trade accounts payable 619,836 412,180 Accrued employees costs 214,175 176,543 Other accounts payable 68,977 73,083 --------------- --------------- 902,988 661,806 =============== ===============
7 Lasiris, Inc. Balance Sheet Unaudited and Expressed in Canadian Dollars
March 31, 1998 ASSETS Current Assets Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts 1,067,762 Prepaid expenses 16,717 Inventory 874,947 Research and development tax credits 141,076 ---------------------- Total Current Assets 2,100,502 ---------------------- Property Plant and Equipment, Net 268,569 ---------------------- Other Assets 8,828 ---------------------- 2,377,899 ====================== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current Liabilities Current Bank debt 85,195 Accounts Payable 702,109 Accrued Expenses and Taxes 235,206 ---------------------- Total Current Liabilities 1,022,510 ---------------------- Long Term Debt 87,500 ---------------------- Deferred Taxes 45,500 ---------------------- Deferred Government Assistance 12,545 ---------------------- STOCKHOLDERS' INVESTMENT Capital Stock 272,890 Retained Earnings 936,954 ---------------------- Total Stockholders Investment 1,209,844 ---------------------- 2,377,899 ======================
Lasiris, Inc. Statement of Operations Unaudited and Expressed in Canadian Dollars
Three Months Ended March 31, 1998 Net Sales 1,503,417 Cost of Sales 776,416 --------------- Gross Profit 727,002 Selling Expenses 202,397 General & Administrative Expenses 373,787 Research & Development Expenses 83,193 --------------- Operating Income 67,625 Financing Expenses 9,032 --------------- Income Before Taxes 58,593 --------------- Income Tax Expense 18,000 --------------- Net Income 40,593 ===============
Lasiris, Inc. Statement of Changes in Financial Position Unaudited and Expressed in Canadian Dollars
Three Months Ended March 31, 1998 Operating Activities Net earnings 40,593 Items not affecting cash - Amortization of capital assets 13,100 Amortization of governmental assistance (289) --------------------- 53,404 Net change in non-cash working capital balances (27,972) --------------------- Cash provided by operating activities 25,432 --------------------- Financing Activities Decrease in long-term debt (12,500) ---------------------- Cash used in financing activities (12,500) ---------------------- Investing Activities Purchase of capital assets and cash used in investing activities (12,932) --------------------- Increase in cash and cash equivalents -- Cash and cash equivalents - Beginning of period -- ---------------------- Cash and cash equivalents - End of period -- ======================
Lasiris, Inc. Notes to Unaudited March 31, 1998 Financial Statements General The interim financial statements have been prepared by Lasiris, Inc. ("Lasiris") without audit and, in the opinion of management reflect all adjustments of a normal recurring nature necessary for a fair statement of (a) the result of operations for the three months ended March 31, 1998, (b) the financial position at March 31, 1998 and (c) the cash flows for the three months period ended March 31, 1998. The interim financial statements are prepared in accordance with Canadian GAAP, and no material adjustments are required to convert to U.S. GAAP. Interim results are not necessarily indicative of results for a full year. These interim financial statements and notes are condensed, do not contain certain information included in the audited annual financial statements, and should be read in conjunction with Lasiris' audited annual financial statements and notes included elsewhere in this 8-K/A. ATTACHMENT B PROFORMA FINANCIAL STATEMENTS Overview On May 13, 1998, Stocker & Yale, Inc. (the "Company") acquired Lasiris, Inc. ("Lasiris"), a Canadian manufacturer of industrial lasers for the machine vision and industrial inspection industries. The Company acquired Lasiris through Lasiris Holdings, Inc., a newly formed New Brunswick Corporation and a subsidiary of the Company ("LHI"). Lasiris will be operated as a wholly-owned Canadian subsidiary. In connection with the acquisition, the stockholders of Lasiris received an aggregate of approximately $3.2 million in cash and 444,146 shares of LHI's capital stock which is exchangeable for shares of the Company's common stock on a one for one basis. The Company financed the cash portion of the consideration through (i) a private placement of 350,000 shares of the Company's common stock at a price of $3.50 per share; (ii) a loan in the amount of $750,000 from a bank which is secured by a second mortgage interest in the Company's headquarters; (iii) a loan of approximately $800,000 pursuant to a credit agreement with the Toronto Dominion Bank and Lasiris; (iv) cash received of $950,000 pursuant to the prepayment of a note receivable due to the Company. Allocation of Purchase Price The acquisition was accounted for as a purchase, and accordingly, the initial purchase price and acquisition costs aggregating approximately $5.5 million has preliminarily been allocated to the assets acquired, which consist of approximately $4.0 million in identifiable assets, approximately $0.4 million in goodwill, and approximately $1.1 million of in-process research and development which was charged to operations in the second quarter of 1998. The purchase price allocations represent the fair values determined by an independent appraisal. The appraisal incorporated established valuation procedures and techniques in determining the fair value of each asset. The amount allocated to in-process research and development relates to projects that had not yet reached technological feasibility and that, until completion of the development, have no alternative future use. These projects will require substantial high risk development and testing by the Company prior to reaching technological feasibility. The following outlines the allocation of purchase price for the acquisition of Lasiris assuming the transaction took place on March 31, 1998: Purchased in-process R&D $1,110,000 Developed Patented Technology 2,411,000 Trademarks/Tradenames 480,000 Assembled workforce 246,000 Goodwill and Deferred Taxes 1,703,000 --------- 5,950,000 Net book value of assets acquired 853,000 --------- 6,803,000 Less deferred taxes (1,255,000) --------- 5,548,000 =========
Unaudited Pro Forma Combined Financial Statements The following unaudited pro forma combined financial statements give effect to the Acquisition. The pro forma combined balance sheet of the Company and Lasiris as of March 31, 1998 assumes that the Acquisition took place on March 31, 1998. The historical balance sheet of Lasiris as of March 31, 1998, has been converted from Canadian dollars to US dollars using the exchange rate in effect on that date. The pro forma statements of operations combine the historical statements of operations of Stocker & Yale and Lasiris for the year ended December 31, 1997, and the three months ended March 31, 1998. The historical statements of operations of Lasiris included in the pro forma combined statements of operations has been converted from Canadian dollars to US dollars using the average exchange rate during the applicable period. The pro forma combined statements of operations assume that the Acquisition took place at the beginning of each respective period, including the related amortization and interest expense adjustments. The pro forma statements of operations do not include the nonrecurring charges for acquired in-process research and development. The unaudited pro forma combined statements of operations do not purport to be indicative of the results which would actually have been reported if the Acquisition had been effected at those dates or which may be reported in the future. These unaudited financial statements should be read in conjunction with the accompanying notes and the respective historical financial statements and related notes of Stocker & Yale on Form 10-K and Lasiris included in this Form 8-K. Stocker & Yale, Inc. Proforma Combined Balance Sheets as of March 31, 1998
Historical Pro-Forma Stocker & Yale Lasiris Adjustments Combined March 31, 1998 ASSETS Current Assets Cash and cash equivalents 149,094 - (36,000) 1 113,094 Accounts receivable, net of reserves 1,674,889 752,772 2,427,661 Inventories 5,106,831 616,837 5,723,668 Prepaid expenses 320,637 11,786 332,423 Research & development tax credits - 99,459 99,459 Prepaid taxes 735,328 - 735,328 Total Current Assets 7,986,779 1,480,854 9,431,633 Property and Equipment, Net 4,079,422 189,341 4,268,763 Other Intangible Assets 3,137,000 2 3,137,000 Goodwill 8,385,800 1,703,000 3 10,088,800 Note Receivable 1,000,000 (1,000,000) 4 - Other Assets, Net of Amortization 83,484 6,224 89,708 ------------------- --------------- ---------------- ----------------- 21,535,485 1,676,419 3,804,000 27,015,904 =================== =============== ================ ================= LIABILITIES Current Liabilities Current portion of long term debt 418,033 60,063 750,000 5 1,228,096 Short term lease obligation 115,072 115,072 Accounts payable and accrued expenses 2,802,275 660,807 175,000 6 3,638,082 Total Current Liabilities 3,335,380 720,869 4,981,249 Long Term Debt and Capital Lease Obligations 5,820,516 61,688 799,000 7 6,681,204 Other Long Term Liabilities 564,688 564,688 Deferred Taxes 851,904 32,078 1,255,000 8 2,138,982 Deferred Grants - 8,844 8,844 14,374,967 STOCKHOLDERS INVESTMENT Common Stock and PIC 10,835,394 192,387 2,664,553 9 13,692,334 Retained Earnings 127,603 660,552 (1,839,552) 10 (1,051,397) TOTAL STOCKHOLDERS INVESTMENT 10,962,997 852,940 12,640,937 ------------------- --------------- ---------------- ----------------- 21,535,485 1,676,419 3,804,000 27,015,904 =================== =============== ================ =================
Notes to Pro Forma Combined Balance Sheets as of March 31, 1998 1. The net adjustment to cash of ($36,000) reflects the sources and uses of cash relating to the Acquisition. Sources $ 1,150,000 from a private placement of Stocker & Yale common stock (see note 9) 731,000 from a short term loan from a bank (see note 6) 950,000 from the collection of a Note Receivable (see note 5) 799,000 from a revolving loan from a bank (see note 8) ----------- $ 3,630,000 Uses $(3,209,000) paid to Lasiris shareholders ( 457,000) expenses related to the Acquisition ----------- $(3,666,000) Net cash $( 36,000)
2. The adjustment to Other Intangible Assets of $3,137,000 records the identifiable intangible assets acquired. Developed Patented Technology $2,411,000 Trademarks/Tradenames 480,000 Assembled Workforce 246,000 ---------- $3,137,000
3. The adjustment to Goodwill consists of allocated purchase price of $448,000 plus deferred taxes on assets acquired of $1,255,000. 4. The adjustment to Note Receivable of ($1,000,000) reflects the payment of this note. 5. The adjustment to Current Portion of Long Term Debt reflects a short term note for $750,000. After payment of fees totaling $19,000, the Company received net proceeds of $731,000 from this note. 6. The adjustment to Accrued Expenses of $175,000 represents the assumption of certain additional liabilities of Lasiris pursuant to the acquisition. 7. The adjustment to Long Term Debt of $799,000 represents the proceeds of a revolving loan from a bank to Lasiris. 8. The adjustment to Deferred Taxes of $1,255,000 is the tax effect of the identified intangible assets acquired. 9. The adjustment to Capital Stock consists of the following: (i) the elimination of Lasiris capital stock and paid in capital; (ii) $2,165,209 representing the fair value of 444,146 shares of the Company's common stock, par value $0.001, issued to the shareholders of Lasiris; and (iii) $1,124,716 representing the sale in a private placement of 350,000 shares of the Company's common stock at a price of $3.50 per share, less offering expenses of $100,284. 10. The adjustment to Retained Earnings consists of ($19,000) in costs associated with the $750,000 short term loan, ($50,000) discount granted in consideration of the prepayment of the $1,000,000 obligation to the Company, the charge to expense of ($1,110,000) in acquired in-process research and development costs, and the elimination of Lasiris retained earnings. Stocker & Yale, Inc. Pro Forma Combined Statements of Operations For the Three Months Ended March 31, 1998
---------- Historical ---------- Adjustments Combined Stocker & Yale Lasiris Net Sales 2,435,341 1,049,385 3,484,726 Cost of Sales 1,650,026 541,938 2,191,964 Gross Profit 785,315 507,447 1,292,762 Selling Expenses 346,512 141,273 487,785 General & Administrative Expenses 553,727 260,903 118,750 (1) 933,380 Research & Development Expenses 189,745 58,069 247,814 Operating Income/(Loss) (304,669) 47,202 (118,750) (376,217) Interest Expenses 114,672 6,304 37,313 (2) 158,289 Income/(Loss) Before Taxes (419,341) 40,898 (156,063) (534,506) Income Tax Expense/(Benefit) (140,000) 12,564 (45,750)(3) (173,186) Net Income/(Loss) (279,341) 28,334 (110,313) (361,320)
Stocker & Yale, Inc. Pro Forma Combined Statements of Operations For the Twelve Months Ended December 31, 1997
------------ Historical ------------- Year ended 11 months ended One Month December 31, December 31, January Adjustments Combined 1997 1997 1997 Stocker & Yale Lasiris Lasiris Net Sales 11,162,026 3,801,752 345,614 15,309,392 Cost of Sales 6,898,970 2,152,128 195,648 9,246,746 Gross Profit 4,263,056 1,649,624 149,966 6,062,646 Selling & Administrative Expenses 4,181,040 893,403 81,218 475,000 (1) 5,630,661 Research & Development Expenses 725,539 167,108 15,192 907,838 Operating Income (643,523) 589,114 53,556 (475,000) (475,853) Interest Expenses 388,337 6,812 619 149,250 (2) 545,018 Income Before Taxes (1,031,860) 582,302 52,937 (624,250) (1,020,872) Income Tax Expense/Benefit (305,000) 172,558 15,687 (183,000)(3) (299,755) Net Income (726,860) 409,744 37,249 (441,250) (721,117)
Notes to Pro Forma Combined Statements of Operations as of March 31, 1998 and as of December 31, 1997 1. Reflects the increased depreciation and amortization relating to the acquisition. 2. Reflects increased interest expenses relating to debt incurred as a result of the acquisition. 3. Reflects adjusted tax provision of combined businesses, taking into account that certain amortization and depreciation expenses are not deductible for tax purposes. -----END PRIVACY-ENHANCED MESSAGE-----