<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):FEBRUARY 3, 1997
----------------
York Research Corporation
(Exact name of registrant as specified in charter)
Delaware 0-72 06-0608633
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
280 PARK AVENUE, SUITE 2700 WEST, NEW YORK, NY 10017
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(Address of principal executive offices)
Registrant's telephone number, including area code: (212-557-6200)
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(Former name or former address, if changed since last report)
<PAGE>
The Current Report on Form 8-K filed by York Research Corporation on
December 4, 1996 in connection with the acquisition of North American Energy
Conservation, Inc. ("NAEC") is amended by including the financial statements and
pro forma financial information required by Item 7.
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, thereunto duly authorized.
YORK RESEARCH CORPORATION
(Registrant)
By:
------------------------------
Michael Trachtenberg, Executive
Vice President
Dated: February 3, 1997
Item 7. Financial Statements and Exhibits
See Index to Financial Statements.
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page(s)
North American Energy Conservation, Inc.:
Report of Independent Certified Public Accountants 2
Balance Sheets - February 28, 1996 (audited) and
October 31, 1996 (unaudited) 3
Statements of Operations for the Year Ended
February 28, 1996 (audited) and the eight months ended
October 31, 1996 and 1995 (unaudited) 4
Statement of Stockholder's Equity (Deficit) for the Year
Ended February 28, 1996 (audited) and for the eight months
ended October 31, 1996 (unaudited) 5
Statements of Cash Flows for the Year Ended
February 28, 1996 (audited) and for the eight months ended
October 31, 1996 and 1995 (unaudited) 6
Notes to Financial Statements 7
through
10
York Research Corporation and Subsidiaries
Pro Forma Consolidated Statements of Operations:
Pro Forma Consolidated Statement of
Operations for the Year Ended February 28, 1996 12
Pro Forma Consolidated Statement of Operations
for the Nine Months Ended November 30, 1996 13
Notes to Pro Forma Consolidated Statements of Operations 13
through
14
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholder of
North American Energy Conservation, Inc.:
We have audited the accompanying balance sheet of North American Energy
Conservation, Inc. as of February 28, 1996 and the related statements of
operations, stockholder's equity (deficit) and cash flows for the year then
ended. 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 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 financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of North American Energy
Conservation, Inc. at February 28, 1996 and the results of its operations and
its cash flows for the year then ended, in conformity with generally accepted
accounting principles.
Grant Thornton LLP
New York, New York
January 31, 1997
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<PAGE>
NORTH AMERICAN ENERGY CONSERVATION, INC.
BALANCE SHEET
February 28, October 31,
1996 1996
------------- --------------
ASSETS: (Unaudited)
CURRENT ASSETS:
CASH $605,660 $128,495
INVESTMENTS 1,228,750 0
ACCOUNTS RECEIVABLE-TRADE 4,293,938 4,044,543
INVENTORY 0 636,456
------------ ------------
TOTAL CURRENT ASSETS 6,128,348 4,809,494
PREPAID EXPENSE 0 450,000
OTHER ASSETS 75,000 575,000
------------ ------------
TOTAL ASSETS $6,203,348 $5,834,494
------------ ------------
------------ ------------
LIABILITIES & STOCKHOLDER'S EQUITY (DEFICIT):
CURRENT LIABILITIES:
ACCOUNTS PAYABLE-TRADE $4,041,546 $4,525,250
ACCRUED TAXES 236,449 374,990
DUE TO YORK RESEARCH CORPORATION 600,000 1,246,645
DUE TO SHAREHOLDER 240,000 60,000
DUE TO RRR'S VENTURES LTD. 3,546,270 0
------------ ------------
TOTAL CURRENT LIABILITIES 8,664,265 6,206,885
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S EQUITY (DEFICIT):
PREFERRED STOCK $.01 par value, authorized 10,000
shares, none issued and outstanding
COMMON STOCK $.01 par value, authorized 10,000 shares,
issued and outstanding 10,000 shares 100 100
ADDITIONAL PAID-IN CAPITAL 325,146 3,744,936
RETAINED EARNINGS (DEFICIT) (3,148,488) (4,117,427)
UNREALIZED GAIN ON SECURITIES REPORTED AT FAIR
VALUE 362,325 0
------------ ------------
TOTAL SHAREHOLDER'S EQUITY (DEFICIT) (2,460,917) (372,391)
------------ ------------
TOTAL LIABILITIES & SHAREHOLDER'S EQUITY
(DEFICIT) $6,203,348 $5,834,494
------------ ------------
------------ ------------
The accompanying notes are an integral part of these financial statements
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<PAGE>
<TABLE>
<CAPTION>
NORTH AMERICAN ENERGY CONSERVATION, INC.
STATEMENTS OF OPERATIONS
For the Year For the Eight Months Ended
Ended OCTOBER 31,
-----------
February 28, 1996 1996 1995
----------------- ---------- ----------
(Unaudited)
<S> <C> <C> <C>
REVENUES $17,614,262 $23,721,058 $4,873,018
COST OF GOODS SOLD 16,627,778 23,260,382 4,710,417
------------- ------------- ------------
GROSS PROFIT 986,484 460,676 162,601
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SELLING, GENERAL & ADMINISTRATIVE EXPENSES 2,243,080 1,226,661 1,699,504
OTHER EXPENSE 621,718 202,954 471,854
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NET LOSS ($1,878,314) ($968,939) ($2,008,757)
------------- ------------- ------------
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</TABLE>
The accompanying notes are an integral part of these financial statements.
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<TABLE>
<CAPTION>
NORTH AMERICAN ENERGY CONSERVATION, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
COMMON STOCK Additional Retained
------------
Shares Paid In Unrealized Earnings
Issued Amount Capital Gain (Deficit) Total
---------- ---------- --------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, February 28, 1995 10,000 $100 $0 $727,198 ($1,270,174) ($542,876)
Capital contributions 325,146 -- -- 325,146
Change in unrealized gain on securities -- -- -- (364,873) -- (364,873)
Net loss -- -- -- -- (1,878,314) (1,878,314)
--------- --------- --------- ---------- ------------ -----------
Balance, February 28, 1996 10,000 100 325,146 362,325 (3,148,488) (2,460,917)
(Unaudited)
Capital contributions -- -- 3,419,790 -- -- 3,419,790
Change in unrealized gain on securities -- -- -- (362,325) -- (362,325)
Net loss -- -- -- -- (968,939) (968,939)
--------- --------- --------- ---------- ------------ -----------
Balance, October 31, 1996 (unaudited) 10,000 $100 $3,744,936 $0 ($4,117,427) ($372,391)
--------- --------- --------- ---------- ------------ -----------
--------- --------- --------- ---------- ------------ -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
<TABLE>
<CAPTION>
NORTH AMERICAN ENERGY CONSERVATION, INC.
STATEMENTS OF CASH FLOW
For the Year For the Eight Months Ended
Ended October 31,
February 28, 1996 1996 1995
----------------- ---------- ----------
OPERATING ACTIVITIES: (Unaudited)
<S> <C> <C> <C>
Net loss from operations ($1,878,314) ($968,939) ($2,008,757)
Adjustments to reconcile net loss from operations to
net cash generated by (used in) operating activities:
Loss on sale of equity securities 45,810 -- 45,810
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (721,960) 249,395 3,571,978
Increase in inventory -- (636,456) --
Increase in other assets -- (650,000) --
Net increase (decrease) in accounts payable, accrued
expenses, and other liabilities (619,374) 1,528,835 (5,366,161)
----------- ----------- ------------
NET CASH USED IN OPERATING ACTIVITIES (3,173,838) (477,165) (3,757,130)
----------- ----------- ------------
INVESTING ACTIVITIES:
Proceeds from sale of investments 425,316 -- 425,316
Increase in other assets (75,000) -- (75,000)
----------- ----------- ------------
NET CASH GENERATED BY INVESTING ACTIVITIES 350,316 0 350,316
----------- ----------- ------------
FINANCING ACTIVITIES:
Cash loaned from RRR'S Ventures Ltd. 2,368,320 -- 2,368,320
----------- ----------- ------------
NET CASH GENERATED BY FINANCING ACTIVITIES 2,368,320 0 2,368,320
----------- ----------- ------------
DECREASE IN CASH (455,202) (477,165) (1,038,494)
CASH AT BEGINNING OF PERIOD 1,060,862 605,660 1,060,862
----------- ----------- ------------
CASH AT END OF PERIOD $605,660 $128,495 $22,368
----------- ----------- ------------
----------- ----------- ------------
</TABLE>
NONCASH INVESTING AND FINANCING ACTIVITIES:
The Company repaid the RRR'S Ventures Ltd. loan with equity securities in
the amount of $2,265,500 for the year ended February 28, 1996 and $1,660,000 and
$1,925,000 for the eight months ended October 31, 1996 and 1995, respectively.
The accompanying notes are an integral part of these financial statements.
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<PAGE>
NORTH AMERICAN ENERGY CONSERVATION, INC.
NOTES TO FINANCIAL STATEMENTS
(Amounts and information applicable to October 31, 1996 and 1995 are unaudited)
----------------------------------
1. NATURE OF BUSINESS
North American Energy Conservation, Inc. ("NAEC" or the "Company") is a
marketer of electric energy generated by others for sale in the wholesale power
business, and commencing September 1996, of natural gas in the wholesale and
retail markets.
The principal markets for the Company's products and services currently are
the Northeastern United States.
As of November 1, 1996, the Company became an 85% owned subsidiary of York
Research Corporation.
2. USE 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 the
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.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
The Company recognizes revenues in the period in which the energy
(electricity or gas) is delivered.
INVENTORY
Inventories are stated at lower of cost or market. Cost is determined on
the average cost method.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash, receivables, due to shareholder, accrued
taxes and accounts payable approximate fair value, principally because of the
short maturity of these items. Equity securities are carried at fair value.
For due to RRR'S Ventures Ltd. and loan receivable, there are no quoted market
prices, and a reasonable estimate of fair value could not be made without
excessive costs.
-7-
<PAGE>
NORTH AMERICAN ENERGY CONSERVATION, INC.
NOTES TO FINANCIAL STATEMENTS
(Amounts and information applicable to October 31, 1996 and 1995 are unaudited)
----------------------------------
UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying unaudited financial statements as of October 31, 1996 and
1995 have been prepared in accordance with generally accepted accounting
principles for interim financial information. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. The results for interim periods are not
necessarily indicative of results to be expected for the year.
4. INVESTMENTS
The Company classifies its investments, which consist of equity securities
in both York Research Corporation, an affiliated entity (see Note 7), and non-
affiliated entities, as available for sale securities. Such securities are
measured at fair value, with net unrealized gains and losses reported in equity.
The net unrealized gain decreased $364,873 in the year ended February 28, 1996,
and decreased $362,325 in the eight months ended October 31, 1996.
At February 28, 1996, the cost, unrealized gains, unrealized losses, and
fair values of the equity securities was $866,425, $362,325, $0 and $1,228,750,
respectively.
Proceeds on sales of non-affiliated equity securities directly bought and
sold by the Company was $425,316 for the year ended February 28, 1996. Losses
of $45,810 were realized. The Company uses the specific identification method
to determine the cost of securities sold.
5. INCOME TAXES
At February 28, 1996, the Company had a net operating loss carryforward of
approximately $1,586,000 for Federal income tax purposes. As a result of the
change in control (see Note 1) as defined in Section 382 of the Internal Revenue
Code, the Company may be unable to realize the benefit of such carryforward and
certain other deferred tax benefits. Accordingly, no tax benefit was recorded
for such items.
-8-
<PAGE>
NORTH AMERICAN ENERGY CONSERVATION, INC.
NOTES TO FINANCIAL STATEMENTS
(Amounts and information applicable to October 31, 1996 and 1995 are unaudited)
----------------------------------
6. MAJOR CUSTOMERS
For the year ended February 28, 1996, two customers exceeded 10% of total
revenues, one for 27% and one for 38%. For the eight months ended October 31,
1996, three customers exceeded 10% of total revenues at 17%, 24% and 35%. For
the eight months ended October 31, 1995, three customers exceeded 10% of total
revenues at 18%, 25% and 28%.
7. RELATED PARTY TRANSACTIONS
NAEC, from time to time, has borrowed various equity securities, including
the common stock of York Research Corporation ("York"), from an affiliated
entity, RRR'S Ventures LTD. ("RRR'S"). NAEC was 100% owned through October 31,
1996, by Robert M. Beningson who is also a shareholder and president of RRR'S,
and a shareholder and chairman of York. The borrowed stock has been used, when
necessary, as collateral for escrow accounts that have been posted with
suppliers.
RRR'S has also loaned NAEC cash to cover various operating expenses. The
equity securities are included in investments on the balance sheet at February
28, 1996 (see Note 4). RRR'S charges fees and interest for the equity
securities and cash loaned to NAEC at rates ranging from 10.75% to 12%.
For the year ended February 28, 1996 and the eight months ended October 31,
1996 and 1995, these fees and interest totaled approximately $637,800, $239,900
and $495,100, respectively.
The loans from RRR'S can be repaid in any combination of cash and equity
securities, whether such securities are borrowed from RRR'S or purchased by
NAEC. Securities returned will be credited for the fair market value of the
security on the date returned. In addition, the Company can sell securities
borrowed from RRR'S and utilize the cash received on such sale.
For the year ended February 28, 1996 and the eight months ended October 31,
1996, the Company was able to benefit from net appreciation in securities
borrowed from or returned to RRR'S in the amount of $325,146 and $793,000,
respectively. The net appreciation realized has been reflected as a capital
contribution due to the common ownership relationship between the Company and
RRR'S.
-9-
<PAGE>
As of October 31, 1996, RRR'S did not require the balance due to be paid.
Accordingly, the balance of $2,626,790 has been reflected as a capital
contribution to NAEC.
In addition, at October 31, 1996, the Company had prepaid $450,000 to Mr.
Beningson for a commitment of future services to NAEC over a two year period.
The Company has an agreement in which the Company reimburses York for the
cost of certain selling, general and administrative activities incurred by York
on behalf of NAEC. In addition, the Company will pay a power brokerage fee to
be agreed upon, based on the level of activity. The Company reimbursed York
$1,200,000, $924,032 and $800,000, respectively, and incurred power brokerage
fees of $675,000, $0 and $675,000, respectively, for the year ended February 28,
1996 and for the eight months ended October 31, 1996 and 1995. At February 28,
1996 and October 31, 1996, the Company owed York $600,000 and $1,246,645,
respectively.
8. COMMITMENTS AND CONTINGENCIES
As part of its marketing operations, the Company routinely enters into
commitments for the purchase of electric and gas energy. The Company obtains
similar commitments from its customers for the sale of the energy.
In December 1996, claims of approximately $844,000 were asserted against
the Company in connection with a dispute with a supplier. The management of the
Company believes that the claims are without merit and the Company is not liable
for such claims.
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<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
------------------------------
The following pro forma consolidated statements of operations for the year
ended February 28, 1996, and the nine months ended November 30, 1996 give effect
to the transaction described in Note 1 to the pro forma consolidated statements
of operations.
The pro forma information is based on historical financial statements of
York Research Corporation and subsidiaries ("York") and North American Energy
Conservation, Inc. ("NAEC"), giving effect to the transactions under the
assumptions and adjustments in the accompanying notes to the pro forma
consolidated statements of operations.
The pro forma consolidated statements of operations for the year ended
February 28, 1996 and the nine months ended November 30, 1996 give effect to
these transactions as if they occurred at the beginning of the respective
periods presented.
The pro forma consolidated statements of operations have been prepared by
York's management based upon the historical financial statements of York and
NAEC. These pro forma consolidated statements of operations may not be
indicative of the results that actually would have occurred if the acquisition
had been in effect on the dates indicated. The pro forma consolidated
statements of operations should be read in conjunction with the historical
financial statements and notes contained elsewhere herein, and in York's annual
report on Form 10-K and quarterly reports on Form 10-Q.
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<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 28, 1996
(UNAUDITED)
YORK
RESEARCH
CORP. NAEC PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES
Services $10,450,061 $0 $0 $10,450,061
Development and other fees 3,941,688 0 (675,000)(A) 3,266,688
Energy sales 0 17,614,262 17,614,262
------------ ------------ ---------- -----------
TOTAL REVENUES 14,391,749 17,614,262 (675,000) 31,331,011
------------ ------------ ---------- -----------
COSTS & EXPENSES
Cost of services 5,452,869 0 0 5,452,869
Cost of energy 0 16,627,778 0 16,627,778
Selling, general & administrative 6,019,547 2,243,080 (645,000)(A)&(B) 7,617,627
Interest and other (income) expense (2,430,295) 621,718 0 (1,808,577)
Minority interest in consolidated
partnership 500,000 0 0 500,000
------------ ------------ ---------- -----------
TOTAL COSTS & EXPENSES 9,542,121 19,492,576 (645,000) 28,389,697
------------ ------------ ---------- -----------
INCOME BEFORE TAXES 4,849,628 (1,878,314) (30,000) 2,941,314
PROVISION FOR TAXES 450,000 0 0 450,000
------------ ------------ ---------- -----------
NET INCOME $4,399,628 ($1,878,314) ($30,000) $2,491,314
------------ ------------ ---------- -----------
------------ ------------ ---------- -----------
Net income per common share $0.35 $0.23
------------ -----------
------------ -----------
Weighted average number of common shares
and common share equivalents 15,512,011 15,512,011
------------ -----------
------------ -----------
</TABLE>
These pro forma financial statements may not be indicative of the results
that actually would have occurred if the acquisition had been in effect on the
dates indicated.
-12-
<PAGE>
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1996
(UNAUDITED)
YORK
RESEARCH
CORP. NAEC PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES
Services $14,554,965 $0 $0 $14,554,965
Energy sales 5,223,483 23,721,058 0 28,944,541
------------ ------------ ---------- ------------
TOTAL REVENUES 19,778,448 23,721,058 0 43,499,506
------------ ------------ ----------- ------------
COSTS & EXPENSES
Cost of services 4,449,000 0 0 4,449,000
Cost of energy 5,019,961 23,260,382 0 28,280,343
Selling, general & administrative 5,079,499 1,226,661 22,500 (B) 6,328,660
Interest and other (income) expense (2,737,322) 202,954 0 (2,534,368)
Minority interest in consolidated
partnership 185,726 0 0 185,726
------------ ------------ ---------- ------------
TOTAL COSTS & EXPENSES 11,996,864 24,689,997 22,500 36,709,361
------------ ------------ ---------- ------------
INCOME BEFORE TAXES 7,781,584 (968,939) (22,500) 6,790,145
PROVISION (BENEFIT) FOR TAXES 2,062,000 0 (365,591) (C) 1,696,409
------------ ------------ ---------- ------------
NET INCOME $5,719,584 ($968,939) $343,091 $5,093,736
------------ ------------ ---------- ------------
------------ ------------ ---------- ------------
Net income per share - primary $0.38 $0.34
------------ ------------
------------ ------------
Net income per share -fully diluted $0.37 $0.33
------------ ------------
------------ ------------
Weighted average number of common shares
and common share equivalent 15,470,050 15,470,050
------------ ------------
------------ ------------
</TABLE>
These pro forma financial statements may not be indicative of the results
that actually would have occurred if the acquisition had been in effect on the
dates indicated.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
1) SUMMARY OF TRANSACTION
As of November 1, 1996, York acquired 85% of the shares of NAEC for $1 from
NAEC. Prior to the acquisition, all of the stock was owned by York's
chairman. The acquisition has been accounted for as a purchase.
NAEC historical values reflect only eight months, as the month ended
November 30, 1996 is included in York's historical values pursuant to the
acquisition of NAEC on November 1, 1996.
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YORK RESEARCH CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
------------------------------
2) PRO FORMA ADJUSTMENTS
(A) To eliminate intercompany revenues and expenses.
(B) To amortize over 10 years the Federal Energy Regulatory
Commission License acquired.
(C) To reflect the tax benefit of NAEC losses.
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