<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
September 30, 1998
NATROL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State of other jurisdiction of incorporation)
000-24567 95-3560780
( Commission file number ) (I.R.S. Employer Identification
21411 Prairie Street, Chatsworth, California 91311
(Address of principal executive offices) (Zip code)
(818) 739-6000
(Registrant's telephone number, including area code)
<PAGE>
ITEM 7. COMBINED FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) COMBINED FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. The following combined
financial statements of business acquired are filed as exhibits hereto:
EXHIBIT 99.1 - COMBINED FINANCIAL STATEMENTS OF LACI LE BEAU CORP. AND
RELATED ENTITIES AS OF SEPTEMBER 30, 1998 AND FOR THE NINE MONTHS THEN
ENDED.
Independent Auditors' Report
Combined Balance Sheet as of September 30, 1998
Combined Statement of Income for the nine months ended September 30, 1998
Combined Statement of Shareholder's Equity for the nine months ended
September 30, 1998
Combined Statement of Cash Flows for the nine months ended September 30,
1998
Notes to Combined Financial Statements
(b) PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS. The following proforma
consolidated financial statements of business acquired are filed as
exhibits hereto:
EXHIBIT 99.2 - UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS OF
NATROL, INC. AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND
CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1997
Unaudited Pro Forma Consolidated Statement of Income for the nine months
ended September 30, 1998
Unaudited Pro Forma Consolidated Statement of Income for the year ended
December 31, 1997
Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 1998
Notes to Unaudited Proforma Consolidated Financial Statements
(c) EXHIBITS
99.1 - COMBINED FINANCIAL STATEMENTS OF LACI LE BEAU CORP. AND RELATED
ENTITIES AS OF SEPTEMBER 30, 1998 AND FOR THE NINE MONTHS THEN
ENDED.
99.2 - UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS OF NATROL,
INC. AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND
CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31,
1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATROL, INC.
Date: 12/14/98 By: /s/ Elliott Balbert
-------------------
Chairman, President and Chief Executive
Officer
Date: 12/14/98 By: /s/ Dennis R. Jolicoeur
-----------------------
Chief Financial Officer and Executive
Vice President
<PAGE>
Combined Financial Statements
LACI LE BEAU CORPORATION AND RELATED ENTITIES
As of September 30, 1998 and
For the Nine Months Then Ended
with Independent Auditors' Report
<PAGE>
Combined Financial Statements
LACI LE BEAU CORPORATION AND RELATED ENTITIES
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
COMBINED FINANCIAL STATEMENTS:
Combined Balance Sheet,
September 30, 1998 2
Combined Statement of Income,
for the Nine Months Ended September 30, 1998 3
Combined Statement of Shareholder's Equity,
for the Nine Months Ended September 30, 1998 4
Combined Statement of Cash Flows
for Nine Months Ended September 30, 1998 5
Notes to Combined Financial Statements 6-8
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholder of Laci Le Beau Corporation and
Related Entities:
We have audited the accompanying combined balance sheet of Laci Le Beau
Corporation and Related Entities (the "Company") as of September 30, 1998 and
the related combined statements of income, shareholder's equity and cash
flows for the nine months then ended. These combined financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these combined financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about 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 presentation of the financial
statements. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the accompanying combined financial statements present fairly,
in all material respects, the financial position of the Company at December 31,
1997 and September 30, 1998 and the results of its operations and its cash flows
for the nine months then ended in conformity with generally accepted accounting
principles.
December 10, 1998
<PAGE>
LACI LE BEAU CORPORATION AND RELATED ENTITIES
COMBINED BALANCE SHEET
SEPTEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash $6,626,344
Accounts receivable, less allowance for doubtful
accounts of $7,500 715,227
Inventories 2,146,535
Prepaid expenses and other current assets 335,093
----------
Total current assets 9,823,199
PROPERTY AND EQUIPMENT:
Machinery and equipment 75,714
Office equipment 46,726
----------
Total property and equipment 122,440
Less accumulated depreciation 42,904
----------
Property and equipment, net 79,536
----------
TOTAL ASSETS $9,902,735
----------
----------
LIABLILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable $ 86,473
Accrued income taxes 394,250
Note payable to officer 233,196
Accrued interest on note payable to officer 270,025
----------
Total current liabilities 983,944
COMMITMENTS
SHAREHOLDER'S EQUITY:
Capital 80,000
Retained earnings 8,838,791
----------
Total shareholder's equity 8,918,791
----------
----------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $9,902,735
----------
----------
</TABLE>
See notes to combined financial statements.
2
<PAGE>
LACI LE BEAU CORPORATION AND RELATED ENTITIES
COMBINED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<S> <C>
NET SALES $4,906,945
COST OF GOODS SOLD 1,982,699
----------
GROSS PROFIT 2,924,246
OPERATING EXPENSES:
Selling and marketing expenses 1,327,965
General and administrative expenses 553,145
----------
Total expenses 1,881,110
----------
INCOME FROM OPERATIONS 1,043,136
INTEREST EXPENSE 29,211
----------
INCOME BEFORE PROVISION FOR INCOME TAXES 1,013,925
PROVISION FOR INCOME TAXES 394,250
----------
NET INCOME $ 619,675
----------
----------
</TABLE>
See notes to combined financial statements.
3
<PAGE>
LACI LE BEAU CORPORATION AND RELATED ENTITIES
COMBINED STATEMENT OF SHAREHOLDER'S EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
TOTAL
RETAINED SHAREHOLDER'S
CAPITAL EARINGS EQUITY
<S> <C> <C> <C>
Balance at January 1, 1998 $ 80,000 $ 8,222,143 $ 8,302,143
Distributions -- (3,027) (3,027)
Net income -- 619,675 619,675
----------- ----------- ------------
Balance at September 30, 1998 $ 80,000 $ 8,838,791 $ 8,918,791
----------- ----------- ------------
----------- ----------- ------------
</TABLE>
See notes to combined financial statements.
4
<PAGE>
LACI LE BEAU CORPORATION AND RELATED ENTITIES
COMBINED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 619,675
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation 16,881
Changes in operating assets and liabilities
Accounts receivable 37,953
Inventories 47,832
Prepaid expenses and other current assets (255,790)
Accounts payable 39,538
Accrued income taxes 357,920
-----------
Net cash provided by operating activities 864,009
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (19,832)
CASH FLOW FROM FINANCING ACTIVITIES
Distribution (3,027)
-----------
NET INCREASE IN CASH 841,150
CASH, BEGINNING OF PERIOD 5,785,194
-----------
CASH, END OF PERIOD $ 6,626,344
-----------
-----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ -0-
Income taxes $ -0-
</TABLE>
See notes to combined financial statements.
5
<PAGE>
LACI LE BEAU CORPORATION AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Background - The combined financial statements of Laci Le Beau Corporation
and Related Entities (collectively the Company) consists of the Laci Le
Beau Corporation (LLB), a Californian corporation, Shay Lee Corporation
(SLC), a California corporation, and Nutrition Products, Inc. (NPI), a sole
proprietorship based in California. The Nutrition Products Trust of 1995
(the Trust) is the sole shareholder of each of these entities.
The capital accounts of LLB and SLC consist of common stock with a basis of
$30,000 and $50,000, respectively. There were no capital amounts for NPI at
Sepember 30, 1998.
Business Activity - The Company is a manufacturer and marketer of herbal
teas that are sold through health food stores as well as food, drug and
mass market retailers.
Concentration of Credit Risk - Financial instruments that potentially
subject the Company to significant concentrations of credit risk are
principally cash and trade accounts receivable.
The Company places its temporary cash investments in checking and savings
accounts with high-quality financial institutions. At September 30, 1998,
substantially all cash was on deposit with three financial institutions.
Concentrations of credit risk with respect to trade accounts receivable are
limited due to the large number of customers comprising the customer base
and their dispersion across many different geographic areas. At September
30, 1998, two customers accounted for 32% and 25%, respectively, of the
Company's trade receivables. The Company performs ongoing credit
evaluations of its customers and normally does not require collateral to
support accounts receivable.
Major Customers - During the nine months ended September 30, 1998, two
customers accounted for 14% and 12% of the Company's net sales,
respectively.
Major Supplier - The Company utilizes one vendor for its processing and
bagging of teas. Total amounts paid to this vendor amounted to $819,300 for
the nine months ended September 30, 1998.
<PAGE>
Inventories - Inventories consist primarily of raw materials and finished
goods, which are stated at the lower of cost (first-in, first-out basis) or
market.
Property and Equipment - Property and equipment are stated at cost. The
Company uses the straight-line method of depreciation.
The estimated useful lives are as follows:
<TABLE>
<S> <C>
Machinery and equipment 5 years
Office equipment 5 years
</TABLE>
Revenue Recognition - The Company sells its products through health food
stores as well as food, drug and mass market retailers directly and through
a national broker network. Sales are recorded when products are shipped to
customers. Net sales represents products shipped, less estimated returns
and allowances for which provisions are made at the time of sale.
Research and Development - Company-sponsored research and development costs
related to both present and future products are expensed as incurred.
Income Taxes - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standard (SFAS) No. 109, "Accounting for
Income Taxes." Under this method, deferred tax assets and liabilities are
determined based on differences between enacted rates and laws that will be
in effect when the differences are expected to reverse.
Deferred tax temporary differences and any related deferred tax assets or
liabilities at September 30, 1998 were not material and the Company's
effective tax rate for both periods approximates the statutory rates.
Pervasiveness of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Fair Value of Financial Instruments - Based on borrowing rates currently
available to the Company for bank loans with similar terms and maturities,
the fair value of the Company's note payable to owner approximates the
carrying value. Furthermore, the carrying value of all other financial
instruments potentially subject to valuation risk (principally consisting
of accounts receivable and accounts payable) also approximates fair value.
<PAGE>
2. INVENTORIES
Inventories consist of the following at September 30, 1998:
<TABLE>
<S> <C>
Raw material $1,479,497
Finished goods 667,038
-----------
Total $2,146,535
-----------
-----------
</TABLE>
3. NOTE PAYABLE TO OFFICER
The Company has a 8% note payable on demand to an officer with a principal
balance of $233,196 dated February 1989. No payments have been made on the
note which has accrued interest at September 30, 1998 of $270,025.
4. LEASE COMMITMENTS
The Company leases its facilities under operating lease agreements with
remaining terms of less than one year. Total lease expense was $91,436 for
the nine month period ended September 30, 1998.
5. SUBSEQUENT EVENT (UNAUDITED)
Effective October 1, 1998, the Shareholder of the Company finalized an
agreement to sell certain assets of the Company for $7.5 million. The
combined financial statements do not contain any adjustments to reflect the
sale of the Company's assets.
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
INTRODUCTION
The accompanying unaudited pro forma consolidated financial statements
reflect the consolidated financial position of Natrol, Inc. (the Company) as of
September 30, 1998 and the results of its operations for the year ended December
31, 1997 and nine months ended September 30, 1998 after giving pro forma effects
to (i) the purchase of the Laci Le Beau Corporation and Related Entities (Laci)
completed after the close of business on September 30, 1998 and (ii) the
Purchase of Pure-Gar L.P. (Pure-Gar) completed on February 27, 1998. The
unaudited pro forma information does not purport to be indicative of actual
results that would have been achieved had the acquisitions and offerings
actually been completed as of the dates indicated on the following pages nor
which may be achieved in the future.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
Nine months ended September 30, 1998
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Laci Le
Beau Corp.
Pure-Gar and Related Nine
Natrol, Inc. L.P. Entities Months
Nine Months Nine Months Nine Months Ended
Ended Ended Ended September
September 30, September September Business 30, 1998
1998 30, 1998 30, 1998 Combination Pro Forma
Actual Actual Actual Adjustments Combined
------------- ------------ ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Net Sales $ 40,739 $ 8,168 $ 4,907 $ 53,814
Cost of goods sold 19,821 3,760 1,983 25,564
-------- -------- -------- ---------
Gross profit 20,918 4,408 2,924 28,250
-------- -------- -------- ---------
Selling and
marketing
expenses 10,715 1,607 1,328 13,650
General and
administrative
expenses 3,411 823 553 (a) 360 5,147
-------- -------- -------- ---------
Total expenses 14,126 2,430 1,881 18,797
-------- -------- -------- ---------
Operating income 6,792 1,978 1,043 9453
Interest income
(expense), net (25) (101) (29) (b)(136) (291)
-------- -------- -------- ---------
Income before income
tax provision 6,767 1,877 1,014 9,162
Income tax provision 3,374 -- 394 (c)(195) 3,573
-------- -------- -------- ---------
Net income $ 3,393 $ 1,877 $ 620 $ 5,589
-------- -------- -------- ---------
Basic earnings per share $ 0.39 $ .64
-------- ---------
-------- ---------
Diluted earnings per
share $ 0.30 $ .49
-------- ---------
-------- ---------
Weighted average
common shares
outstanding-
basic 8,694,945 8,694,945
--------- ---------
--------- ---------
Weighted average
common shares
outstanding-
diluted 11,311,938 11,311,938
---------- ----------
---------- ----------
</TABLE>
See notes to the unaudited pro forma condensed consolidated financial
statements.
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year ended December 31, 1997
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Laci Le Beau
Pure-Gar Corp.
L.P. and Related
Natrol, Inc. Year Ended Entities Year Ended
Year Ended December Year Ended December
December 31, 27, December Business 31, 1997
1997 1997 31, 1997 Combination Pro Forma
Actual Actual Actual Adjustments Combined
----------- ------------ ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Net Sales $ 42,875 $ 8,709 $ 6,893 $ 58,477
Cost of goods 19,800 3,920 2,895 26,615
---------- ---------- -------- -----------
Gross profit 23,075 4,789 3,998 31,862
Selling and
marketing
expenses 11,398 1,955 1,725 15,078
General and
administrative
expenses 4,450 2,582 535 (d) 947
(e) 733 9,247
---------- ---------- -------- -----------
Total expenses 15,848 4,537 2,260 24,325
---------- ---------- -------- -----------
Operating income 7,227 252 1,738 7,537
Interest income
(expense), net (220) (216) (36) (f)(681) (1,153)
---------- ---------- -------- -----------
Income before income
tax provision 7,007 36 1,702 6,384
Income tax provision 2,816 - 661 (g)(924) 2,553
---------- ---------- -------- -----------
Net income $ 4,191 $ 36 $ 1,041 $ 3,831
---------- ---------- -------- -----------
---------- ---------- -------- -----------
Basic earnings per
share $ 0.59 $ .54
---------- ---------
---------- ---------
Diluted earnings per
share $ 0.41 $ .37
---------- ---------
---------- ---------
Weighted average
common shares
outstanding-
basic 7,100,000 7,100,000
---------- ---------
---------- ---------
Weighted average
common shares
outstanding-
diluted 10,272,859 10,272,859
---------- ----------
---------- ----------
</TABLE>
See notes to the unaudited pro forma condensed consolidated financial
statements.
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(in thousands)
<TABLE>
<CAPTION>
Natrol,
Inc. September
September Business 30, 1998
30, 1998 Combination Pro Forma
Actual Adjustments Combined
---------- ------------- ----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 32,101 (h)(7,500) $ 13,136
Accounts receivable, net 13,136 13,136
Inventories 11,839 (h) 2,147 13,986
Deferred taxes 554 554
Prepaid expenses and other current assets 393 393
-------- --------
Total current assets 58,023 52,670
Equipment and leasehold improvements, net 4,851 (h) 153 5004
Goodwill 8,719 (h) 5,200 13,919
Deposits 43 43
Trademarks and patents 16 16
-------- --------
Total assets $ 71,652 $ 71,652
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 8,844 $ 8,844
Accrued expenses 3,526 3,526
Accrued payroll and related liabilities 1,049 1,049
Income taxes payable 780 780
-------- --------
Total current liabilities 14,199 14,199
Deferred income taxes - noncurrent 73 73
Stockholders' equity (deficit)
Common stock 133 133
Additional paid-in capital 60,172 60,172
Retained earnings (deficit) (2,362) (2,362)
-------- --------
57,943 57,943
Receivable from stockholder (563) (563)
-------- --------
Total stockholders equity (deficit) 57,380 57,380
-------- --------
Total liabilities and stockholder's equity $ 71,652 $ 71,652
-------- --------
-------- --------
</TABLE>
See notes to the unaudited pro forma condensed consolidated financial statements
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
The unaudited pro forma condensed consolidated statement of income for the nine
months ended September 30, 1998 gives effect to the consolidated results of
operations for the nine months ended September 30, 1998, as if the acquisitions
of Pure-Gar L.P. (Pure-Gar) and Laci Le Beau and Related Entities (Laci)
occurred at January 1, 1998. The unaudited pro forma condensed consolidated
statement of income for the year ended December 31, 1997 gives effect to the
operations for the year ended December 31, 1997, as of the acquisitions of
Pure-Gar L.P. and Laci Le Beau and Related Entities occurred at January 1, 1997.
These results are not necessarily indicative of the consolidated results of
operations of the Company as they may be in the future, or as they might have
been had these events been effective at January 1, 1997 and 1998, respectively.
The unaudited pro forma condensed consolidated balance sheet gives effect to the
financial position at September 30, 1998, as if the acquisition of Laci Le Beau
and Related Entities occurred at September 30, 1998. Such consolidated financial
position is not necessarily indicative of the consolidated financial position of
the Company as it may be in the future, or as it might have been had these
events been effective at September 30, 1998. The unaudited pro forma condensed
consolidated financial information should be read in conjunction with the
historical financial statements of the Company, Laci Le Beau Corporation and
Related Entities and Pure-Gar L.P. and the related notes thereto contained in
the Natrol, Inc. prospectus dated July 22, 1998 and quarterly report on Form 10
as of and for the quarter ended September 30, 1998 as filed with the Securities
and Exchange Commission.
PRO FORMA ADJUSTMENTS FOR THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 ARE AS FOLLOWS:
(a) Gives effect to the amortization of goodwill of $450 and the amortization
of intangible assets of $260, as if the acquisitions of Pure-Gar and Laci,
respectively, had taken place on January 1, 1998, net of recorded goodwill
amortization of $350 related to the Pure-Gar L.P. acquisition.
(b) Gives effect to pro forma interest expense of $289 offset by actual
interest expense of $160, as if the debt incurred in the acquisition of
Pure-Gar was made on January 1, 1998. Pro forma interest expense is based
on a term note (8.5% interest rate) and line of credit (8.5% to 7.69%
interest rate) with principal balances of $8.9 million and $5.5 million,
respectively.
(c) Gives effect to taxes for adjustments described in footnotes (a) and (b)
such that the pro forma income tax provision is at the statutory rate for
the period presented.
PRO FORMA ADJUSTMENTS FOR THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1997 ARE AS FOLLOWS:
(d) Gives effect to the amortization of goodwill of $600 and the amortization
of intangible assets of $347, as if the acquisitions of Pure-Gar and Laci,
respectively, had taken place on January 1, 1997.
(e) Pro forma general and administrative expenses include a non-recurring legal
settlement expense incurred by Pure-Gar of $733.
(f) Gives effect to pro forma interest expense of $1.2 million offset by actual
interest expense of $470, as if the debt incurred in the acquisition of
Pure-Gar was made on January 1, 1997. Pro forma interest expense is based
on a term note (8.5% interest rate) and line of credit (8.5% to 7.69%
interest rate) with principal balances of $8.9 million and $5.5 million,
respectively.
(g) Gives effect to taxes for adjustments described in footnotes (d), (e),
(f) and (g) such that the pro forma income tax provision is at the
statutory rate for the period presented.
<PAGE>
PRO FORMA ADJUSTMENTS FOR THE UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AT
SEPTEMBER 30, 1998 ARE AS FOLLOWS:
(h) Reflects preliminary purchase price allocation for the Laci acquisition
consisting of inventory, equipment and intangible assets in exchange for
$7.5 million cash.
