8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 15, 2005

StockerYale, Inc.

(Exact name of registrant as specified in its charter)

Massachusetts	000-27372	04-2114473
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer Identification No.)
32 Hampshire Road Salem, New Hampshire		03079
(Address of principal executive offices)		(Zip Code)

(603) 893-8778

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

On April 15, 2005, StockerYale, Inc. (the “Company”) entered into a Purchase and Sales Agreement and Deposit Receipt (the “Agreement”) with John F. Alberico (the “Buyer”), dated April 12, 2005, pursuant to which (i) the Company agreed to sell to the Buyer, and the Buyer agreed to purchase from the Company, for $4,750,000 (the “Sale Transaction”) the property owned by the Company and located at 32 Hampshire Road in Salem, New Hampshire (the “Property”) and (ii) the Company agreed to lease from the Buyer approximately 32,000 square feet of the Property for an initial term of ten years with rental rates during such period ranging from approximately $228,800 to $288,640 per year in base rent plus a pro rata share of all operating costs of the Property (the “Lease Transaction”). The Company intends to use the net proceeds from the Sale Transaction to repay in full two outstanding convertible notes issued by the Company.

Although the transactions contemplated by the Agreement are expected to be consummated within 75 days of the date of the Agreement, such transactions are subject to certain closing conditions and there can be no assurance that the transactions will be consummated.

A copy of the Agreement is filed herewith as Exhibit 99.1 and is incorporated herein by reference.

Item 2.02. Results of Operations and Financial Condition.

On April 18, 2005, the Company issued a press release reporting its results of operations for its fiscal first quarter ended March 31, 2005. A copy of the press release issued by the Company concerning the foregoing results is furnished herewith as Exhibit 99.2 and is incorporated herein by reference.

The information set forth in this Item 2.02 and in Exhibit 99.2 hereto shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information set forth in this Item 2.02 and in Exhibit 99.2 hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The discussion of the Lease Transaction is incorporated by reference from “Item 1.01. Entry into a Material Definitive Agreement” of this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibit 99.1 listed in the Exhibit Index immediately preceding such exhibit is filed with this report. Exhibit 99.2 listed in the Exhibit Index immediately preceding such exhibit is furnished with this report.

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.

	StockerYale, Inc.
Date: April 18, 2005
	By:	/s/    RICHARD P. LINDSAY
		Richard P. Lindsay
		Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Purchase and Sales Agreement and Deposit Receipt
99.2	Press Release of StockerYale, Inc., dated April 18, 2005

EX-99.1

Exhibit 99.1

PURCHASE AND SALES AGREEMENT AND DEPOSIT RECEIPT COMMERCIAL, INVESTMENT & INDUSTRIAL REAL ESTATE

This agreement made this Twelfth day of April, 2005 between: StockerYale Corporation of 32 Hampshire Blvd. City Salem County Rockingham State NH Zip              (hereinafter referred to as SELLER).

and John F. Alberico and/or his corporate assigns of              City Windham County Rockingham State NH Zip              (hereinafter referred to as BUYER).

WITNESSETH: That the SELLER agrees to sell and convey and the BUYER agrees to PURCHASE the real estate located in Salem, New Hampshire known or more particularly described as 32 Hampshire Blvd. (the “Property”) including the following personal property: all furniture and fixtures not set out in Exhibit One

Book                                 Page                                 Date                                .

PURCHASE PRICE: $ Four Million Seven Hundred Fifty Thousand Dollars and 00/100 cents ($4,750,000.00).

ALLOCATION OF PURCHASE PRICE: The purchase price shall be allocated, between the real property and the personal property, by mutual agreement by BUYER and SELLER within 30 days of this Agreement.

DEPOSITS:

a. Initial Deposit: An initial deposit, receipt of which is hereby acknowledged, in the amount of $ 10,000.00 is to be applied first toward the purchase price, and is to be held in an escrow account by:

Grubb & Ellis|Coldstream Real Estate Advisors, Inc. (“Grubb & Ellis|CREA”)

b. Additional Deposit: An additional deposit, to be applied to the Purchase Price in the amount of $90,000.00 is to be paid on or before End of Due Diligence Period and is to be held in an escrow account by:

Grubb & Ellis|CREA. Balance Due: $4,650,000.00

TRANSFER OF TITLE: SELLER agrees to:

a. Convey the real property to the BUYER by a good and marketable warranty deed, free and clear of all encumbrances, except as noted herein.

b. Convey all personal property to the BUYER by Bill of Sale, free and clear of all encumbrances, except as noted herein. In the event that the title to the subject property, pursuant to the above, proves not to be marketable, all rights and obligations herein may, at the BUYER’s option, terminate and all deposit monies returned to BUYER.

c. Closing to be held on or before thirty days from the date all contingency periods expire.

POSSESSION: Possession, free of all tenants, occupants and all personal property except as provided herein, is to be given on or before at closing.

INSURANCE: The premises and contents shall, until the full performance of this agreement, be kept insured against Fire, with Extended Coverage, by the SELLER. In case of loss, all sums recoverable from said insurance shall be paid or assigned, on delivery of title, to the BUYER, unless the premises and contents shall have been restored to their former condition by the SELLER; or, at the option of the BUYER, this agreement may be rescinded and any deposit monies refunded if loss shall exceed: $20,000. The SELLER shall provide evidence of current insurance coverage to the BUYER upon request.

Standard Form for the Members of the NH Commercial Investment Board of REALTORS (NH CIBOR) PO Box 550, 115A Airport Road, Concord, NH 03302-0550 (603) 224-1170

Rev 112902

PAGE 1

-Continued-

MAINTENANCE: Until possession is delivered, SELLER agrees to maintain all real and personal property in good condition and working order.

INSPECTIONS: The BUYER is encouraged to seek information from professionals normally engaged in the business regarding any specific areas of concern. The Agent makes no warranties or representations regarding the condition, permitted use or value of the SELLER’s real or personal property. This contract is subject to the following inspections, with results being satisfactory to the BUYER:

TYPE OF INSPECTION:	RESULTS TO SELLER	TYPE OF INSPECTION:	RESULTS TO SELLER
a.      SEE “ADDITIONAL PROVISIONS”	within          Days	f.	within          Days
b.      Environmental	within 45 Days	g.	within          Days
c.      Structural	within 45 Days	h.	within          Days
d.      Mechanical Systems	within 45 Days	i.	within          Days
e.	within          Days	j.	within          Days

The use of days is intended to mean calendar days from the effective date of the contract. All inspections will be done by professionals normally engaged in the business, to be chosen and paid for by the BUYER. If the results of any inspection or other condition specified herein reveal significant defects which, were not disclosed or previously known to the BUYER, the SELLER shall have the option of repairing the unsatisfactory condition(s) prior to transfer of title if the BUYER and SELLER both agree, failing which the BUYER may terminate the contract and all deposits shall be returned to the BUYER, Notification in writing of intent to so repair should be delivered to the BUYER or BUYER’s Agent within five (5) days of receipt by the SELLER of notification of unsatisfactory condition(s). Should the SELLER elect not to repair such unsatisfactory condition(s), the BUYER may declare the contract null and void by notifying the SELLER in writing within five (5) days of receipt of SELLER’s election not to repair, and any earnest money shall be returned to the BUYER, If the BUYER does not notify the SELLER that an inspection is unsatisfactory within the time period set forth above, this contingency is waived by the BUYER. In the absence of the inspection(s) mentioned above, the BUYER is relying completely upon the BUYER’s own opinion as to the condition of the property.

BUYER HEREBY ELECTS TO WAIVE THE RIGHT TO ALL INSPECTIONS AND SIGNIFIES BY INITIALING HERE             

PRORATIONS: All income earned but not received, all expense incurred but not paid out, all income received but not earned, and all expense paid out but not incurred as of the date of transfer of title shall be apportioned, as appropriate, between the SELLER and the BUYER as of the date of transfer of title.

LIQUIDATED DAMAGES AND INTERPLEADER PROVISIONS: If the BUYER shall default in the performance under this agreement, the amount of the deposit may, at the option of the SELLER, become the property of the SELLER as reasonable liquidated damages. In the event of any dispute relative to the deposit monies held in escrow, the Escrow Agent may, in its sole discretion, pay said deposit monies into the Clerk of Court of proper jurisdiction in an Action of Interpleader, providing each party with notice thereof shall be discharged from its obligations as recited herein, and each party to this agreement shall thereafter hold the Escrow Agent harmless in such capacity. Each party hereto agrees that the Escrow Agent may deduct the cost of bringing up such Interpleader Action from the monies held in escrow prior to the forwarding of same to the Clerk of such Court.

FINANCING: This agreement þ is or ¨ is not contingent upon BUYER obtaining financing under the following terms:

a. Amount 75%     b. Rate: Market     c. Type: __________     d. Term 5yr.

e. Application: Application for financing must be made on or before April 25, 2005, failing which, this contingency shall be deemed to have been waived.

f. Evidence of Financing Commitment: On or before May 25, 2005 BUYER shall provide SELLER or SELLER’s agent with written evidence, acceptable to the SELLER, as to the BUYER’s ability or inability to obtain financing. TIME BEING OF THE ESSENCE. Upon such notification, if the BUYER is unable to obtain financing, this agreement shall become null and void and the Escrow Agent is hereby authorized to return BUYER’S deposit in full. In the event that the BUYER fails to comply with such written notification, the financing contingency shall lapse or, at the SELLER’s option, the agreement shall become void and in such event, the Escrow Agent is hereby authorized to return the BUYER’s deposit in full.

Standard Form for the Members of the NH Commercial Investment Board of RELATORS (NH CIBOR) PO Box 550, 115A Airport Road, Concord, NH 03302-0550 (603) 224-1170

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-Continued-

AGENT: The undersigned SELLERS and BUYERS understand that Grubb&Ellis|CREA Agency represents the SELLER, and Grubb&Ellis|CREA assisted Agency Represents the BUYER in this transaction.

ADDITIONAL PROVISIONS:

1. Due Diligence Period: BUYER shall have a forty-five (45) due diligence period during which Buyer will have the right to inspect the Property. In addition, If, during said Due Diligence period, BUYER determines, in its sole discretion, that the Property does not meet BUYER’s investment criteria, BUYER has the right to terminate this Agreement and receive all deposits back in full with no further obligations owed by either party to the other resulting from this Agreement. Due Diligence period shall commence on date this Agreement is fully executed.

2. Sale Leaseback: This Agreement is contingent upon SELLER leasing a portion of the Property where the terms of the lease will include the following terms: SELLER agrees to lease a minimum of 32,000 SF at base lease rates of: for years 1-5: $7.15 psf, NNN; for years 6-8: $8.25 psf, NNN; for years 9-10: $9.02 psf. In addition, BUYER will pay its pro-rata share of all operating costs. The initial lease term shall be for a minimum of ten years. All additional terms and conditions of the leaseback are to be agreed upon and attached hereto and made a part hereof as Exhibit Two, by the end of the Due Diligence Period.

In addition, SELLER will be responsible for the demising of Property to accommodate SELLER’s leasehold. Said demising shall be done in a manner consistent with all relevant regulations. A detailed design of said demising of the premises shall be agreed to by both parties and attached hereto and a part hereof as Exhibit Two, prior to completion of the Due Diligence Period.

3. Credit Review: Pursuant to Additional Provision 2, above, this Agreement is contingent upon Buyer review of SELLER’s financial data and that, in BUYER’s sole discretion, SELLER’s credit rating is satisfactory. In addition, SELLER agrees to provide BUYER with a capital reserve equivalent to one year’s rent or an annually renewing letter of credit, guaranteeing the same amount, from an accredited bank or other financing entity acceptable to BUYER for guaranteeing the Leaseback and other representations made as a part of this Agreement for the purchase of the Property.

4. Furniture and Fixtures: All furniture and fixtures, except those specifically set out in Exhibit One, currently residing in the Premises or on the Property, shall be considered a part of the sale of the Property.

5. BUYER’s financing entity must agree to the form of the SELLER Leaseback agreement.

ENTIRE AGREEMENT: This Agreement constitutes the entire agreement between the parties relating to the subject thereof, and any prior agreements pertaining thereto, whether oral or written, have been merged and integrated into this Agreement.

THIS IS A LEGAL INSTRUMENT, IF NOT UNDERSTOOD, LEGAL, TAX OR OTHER COUNSEL SHOULD BE CONSULTED BEFORE SIGNING.

ACCEPTED:
/s/ John Alberico	John Alberico	4/15/05
BUYER	PRINTED/TITLE	DATE
/s/ Mark W. Blodgett	MARK W. BLODGETT	4/15/05
SELLER	PRINTED/TITLE	DATE

Standard Form for the Members of the NH Commercial Investment Board of RELATORS (NH CIBOR) PO Box 550, 115A Airport Road, Concord, NH 03302-0550 (603) 224-1170

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EX-99.2

Exhibit 99.2

STOCKERYALE ANNOUNCES FIRST QUARTER 2005 FINANCIAL RESULTS

Company Reports Record Gross Profit and Agrees to Sell

Manufacturing Facility for $4.75 Million

Salem, NH, April 18, 2004 — StockerYale, Inc., (NASDAQ: STKR), a leading independent provider of photonics-based products today announced its financial results for the first quarter ended March 31, 2005.

Revenues for the first quarter of 2005 increased 11% to $4.6 million from those reported in both the first and fourth quarters of 2004. Revenue growth was driven by higher laser and specialty optical fiber shipments. Order bookings increased 12% to $4.8 million in the first quarter 2005 from $4.3 million the previous quarter reflecting a doubling of specialty fiber orders and improved penetration of lasers into OEM accounts.

Gross profit for the quarter increased 32% to $1.6 million from the comparable quarter of 2004. The increase in gross profit resulted from the combination of higher sales and a significant improvement in gross margin. The gross margin as a percentage of sales increased from 30% in the first quarter of 2004 to 36% in the first quarter of 2005 as the result of selling higher margin products and material cost reductions.

The operating loss for the first quarter was $1.5 million versus $1.4 million in the comparable 2004 quarter and down 52% from $2.9 million in the prior quarter, excluding asset impairment charges of $173,000. Operating expenses were down 18% compared to the fourth quarter of 2004, but increased 15% to $3.1 million compared to $2.7 million the first quarter of 2004. The increase primarily reflected higher non-recurring legal expenses, which the Company expects to decline significantly in the near future. Research and development expenses of $833,000 reported in the first quarter of 2005 were consistent with the first quarter of 2004 and selling expenses increased 13% to $784,000 compared to the first quarter of 2004.

In April 2005, the Company has reached an agreement to sell its 100,000-square-foot Salem, N.H. manufacturing facility for $4.75 million subject to completion of due diligence procedures and contingent on the buyer receiving financing. It is expected that the transaction will close within 75 days. As previously disclosed, the Company relocated the Salem illumination business to Montreal in June 2004. Per the agreement with the buyer of the Salem facility, the Company will lease back approximately 30,000 square feet for its specialty fiber operation and corporate headquarters. The Company intends to use the proceeds to pay in full and extinguish two of the convertible notes issued by the Company. The Company expects the sale of the facility to improve both gross and operating margins and its balance sheet. The Company plans to complete a similar sale/leaseback transaction for its Montreal manufacturing facility to further improve the Company’s financial performance, balance sheet and liquidity.

“StockerYale’s first quarter represented a substantial financial improvement over the preceding quarter, as the Company continued to generate new product momentum from substantial technology investments over the last two years,” said Mark W. Blodgett, Chief Executive Officer. “I am particularly pleased by the progress in our fiber business. Given the dramatic slowdown in the telecom industry, the Company made a strategic decision to make additional investments to develop new fibers for both the industrial and defense markets. Concurrently, the Company began long-term qualification trials with prospective OEM customers. Increased fiber order bookings and revenues reflect significant progress in qualification trials, as well as increased sales to Mitsubishi,” said Blodgett. “The dramatic restructuring of operations to reduce costs, a refocused product development effort, and a more diversified sales strategy are beginning to result in improved financial performance,” Blodgett added.

Outlook

“This year is off to a strong start led by our laser and specialty fiber businesses. We expect that increased sales to existing OEMs, the introduction of several new products, and improved manufacturing efficiencies will result in a meaningful improvement in gross margins and operating profits throughout the year,” said Ricardo A. Diaz, Chief Operating Officer. “We expect both our laser and fiber businesses to drive our top line growth during the year presuming continued strength in the machine vision market, as well as increased acceptance of our products in the defense market, including fiber optic gyroscopes for navigation systems and reference lasers for missile counter-measure systems. In addition, the Company is beginning to receive orders for its new line COBRA^™ 500 LED Line Illuminators, which received Photonic Spectra’s prestigious product of the year award this past January,” Diaz added.

“The first quarter represents an important milestone for StockerYale as we met our internal operational objectives for the quarter,” said Blodgett. “While we are pleased with the strength of our laser and specialty fiber sales, we continue to aggressively implement a new product development strategy to increase long-term sales growth in our traditional machine vision market, as well as the defense and medical markets.

Use of Non-GAAP Financial Measures

The Company provides non-GAAP financial measures to complement its consolidated financial statements presented in accordance with GAAP. These non-GAAP financial measures are intended to supplement the user’s overall understanding of the Company’s current financial performance and its prospects for the future. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by identifying certain expenses, gains and losses that, when excluded from the GAAP results, may provide additional understanding of the Company’s core operating results or business performance. However, these non-GAAP financial measures are not intended to supercede or replace the Company’s GAAP results.

About StockerYale

StockerYale, Inc., headquartered in Salem, NH, is an independent designer and manufacturer of structured light lasers, light emitting diodes, (LEDs), fiber optic, and fluorescent illumination technologies as well as specialty optical fiber and phase masks for use in a wide range of markets and industries including the machine vision, telecommunications, aerospace, defense and security, utilities, industrial inspection, and medical markets.

StockerYale serves a widely varied, international customer base and reinvests a significant percentage of its revenues in R&D to meet the future requirements of its customers. StockerYale has offices and subsidiaries in the U.S., Canada, Europe, and the Pacific Rim.

For more information about StockerYale and their innovative products, visit the Company’s web site at www.stockeryale.com or contact StockerYale, Inc., at 32 Hampshire Rd., Salem, NH, 03079. Call 800-843-8011, Fax 603-893-5604, Email: info@stockeryale.com.

Notice to Investors:

This press release contains forward-looking statements that do not give full weight to all the potential risks, but relate to StockerYale’s plans, objectives, and expectations, which are dependent upon a number of factors outside of StockerYale’s control including, but not limited to: uncertainty that StockerYale’s new products will gain market acceptance; the risk that delays and unanticipated expenses in developing new products could delay the commercial release of those products and affect revenue estimates; the risk that one of our competitors could develop and bring to market a technology that is superior to those products that we are currently developing; and StockerYale’s ability to capitalize on its significant research and development efforts by successfully marketing those products that the Company develops. You should also refer to the discussion under “Certain Factors Affecting Operating Results” in StockerYale’s form 10-K for additional matters to be considered in this regard. Thus, actual results may differ materially. All Company, brand, and product names are trademarks or registered trademarks of their respective holders. StockerYale undertakes no duty to update any of these forward-looking statements.

This press release also contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to, among other things, the Company’s future operating results and sales trends. Reliance should not be placed on forward looking statements because they involve known and unknown risks, uncertainties and other factors which are in some cases, beyond the control of StockerYale, which may cause the actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements.

Consolidated Statements of Operations

($ In thousands except per share data)

	Three Months Ended March 31,
	2005			2004
Net Sales	$	4,598		$	4,159
Cost of Sales		2,961			2,922
Gross Profit		1,637			1,237
Research & Development Expenses		833			820
Selling, General & Administrative Expenses		2,201			1,781
Amortization of Intangible Assets		80			80
Operating Loss		(1,477	)		(1,444	)
Interest & Other Income/(Expense)		9			(5	)
Amortization of Debt Discount & Financing Costs		499			730
Interest Expense		188			123
Pretax Loss		(2,155	)		(2,302	)
Tax Provision Benefit		0			3
Net Loss	$	(2,155	)	$	(2,305	)
Loss Per Share	$	(0.06	)	$	(0.14	)
Weighted Average Shares Outstanding		24,596,517			16,636,302
Consolidated Condensed Balance Sheets
	March 31, 2005			December 31, 2004
ASSETS
Total Current Assets	$	8,569		$	10,751
Property, Plant & Equipment, Net		18,069			18,582
Other Assets		4,286			4,445
Total Assets	$	30,924		$	33,778
LIABILITIES AND STOCKHOLDERS EQUITY
Total Liabilities	$	13,469		$	14,197
Stockholders Equity		17,455			19,581
Total Liabilities & Stockholders Equity	$	30,924		$	33,778

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