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) July 1, 1996
------------------
AIRSENSORS, INC.
------------------
(Exact name of registrant as specified in its charter)
Delaware
------------------------
(State of Incorporation)
0-16115 91-1039211
------------------------ -----------------------
(Commission File Number) (IRS Employer I.D. No.)
16804 Gridley Place, Cerritos, CA 90703
-------------------------------------- ----------
Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code: (310) 860-6666
<PAGE>1
ITEM 2. ACQUISITION OF ASSETS
Effective July 1, 1996, the Registrant acquired certain assets of the Gas
Division of Ateco Automotive Pty. Ltd. ("Ateco") for cash in the amount of
approximately $6,500,000. Ateco, a private company in Australia, has
distributed the Company's gaseous fuel carburetion systems and related
devices for use with internal combustion engines since approximately 1969.
In order to effectuate the transaction and conduct business in Australia,
IMPCO Technologies Inc. ("IMPCO") a wholly owned subsidiary of the
Registrant, established a new Australian operating company, IMPCO
Technologies Pty. Limited ("IMPCO Ltd."). The assets, which were acquired by
IMPCO Ltd., consist primarily of receivables, inventory, equipment, a note,
business goodwill, distribution rights in Australia, and a 50% interest in
Ateco's sub-distributor. The amount of the consideration was determined
through negotiations between Ateco and IMPCO Ltd.
The purchase price was primarily financed through term loans provided by Bank
of America NT&SA and its Sydney, Australia branch. The loans of
approximately $4,000,000 are three-year loans with five-year amortization
schedules with interest at market rates. In addition, accounts receivables
due to IMPCO from Ateco, totaling $1,852,000, were offset against the
purchase price. The balance of the purchase price was financed by IMPCO's
existing line of credit with Bank of America NT&SA.
Impco Ltd. plans to continue the current business of marketing and
distributing IMPCO's gaseous fuel carburetion systems and related devices in
Australia and may engage in other related businesses in the future.
<PAGE>2
ITEM 7. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED Page
----------------------------------------- ----
Audited financial statements for Gas Division of
Ateco Automotive Pty. Ltd.
Report of independent auditors 6
Balance sheet at June 30, 1996 7
Statement of operations and division equity
for the year ended June 30, 1996 8
Statement of cash flow
for the year ended June 30, 1996 9
Notes to financial statements 10
(b) PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
-------------------------------------------
Pro forma condensed combined balance sheet of AirSensors,
Inc. and subsidiaries and Gas Division of Ateco Automotive
Pty. Ltd. and subsidiary as of April 30, 1996 and
June 30, 1996, respectively 14
Pro forma condensed combined income statements of AirSensors,
Inc. and subsidiaries and the Gas Division of Ateco Automotive
Pty. Ltd. and subsidiary for the fiscal year ended
April 30, 1996 and June 30, 1996, respectively 16
Notes to the pro forma condensed combined financial statements 17
<PAGE>3
(c) EXHIBITS
--------
2.5 Deed of Sale of Business by and among IMPCO Technologies
Pty Limited, as buyer, and Ateco Automotive Pty Limited,
as seller, dated as of July 1, 1996. (1)
2.6 Deed of Release by and among IMPCO Technologies, Inc. and
Ateco Automotive Pty Limited dated as of July 1, 1996. (1)
2.7 Shareholders Agreement for Gas Parts (NSW) Pty Limited by
and among IMPCO Technologies Pty Limited, Gas Parts Pty
Limited, and Gas Parts (NSW) Pty Limited, dated as of
July 4, 1996. (1)
2.8 Loan Agreement for IMPCO Technologies, Inc., as borrower,
AirSensors, Inc., as Guarantor, and Bank of America
National Trust and Savings Association, as lendor, dated
as of June 25, 1996. (1)
2.9 Loan Agreement for IMPCO Technologies Pty Limited as
borrower and Bank of America Pty Limited. as lendor,
dated as of June 27, 1996. (1)
23.1 Consent of Ernst & Young dated September 12, 1996. (1)
- ------------------------------
(1) Incorporated by reference from Form 8-K/A filed on September 16, 1996.
SIGNATURES
Pursuant to the requirement 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.
AirSensors, Inc.
Date: November 22, 1996 By/s/Thomas M. Costales
-----------------------------
Thomas M. Costales
Chief Financial Officer
and Treasurer
<PAGE>4
GAS DIVISION OF ATECO AUTOMOTIVE PTY. LTD.
AUDITED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1996
<PAGE>5
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITOR
Board of Directors
Impco Technologies Pty. Ltd.
We have audited the accompanying balance sheet of the Gas Division of Ateco
Automotive Pty. Ltd. as of June 30, 1996 and the related statements of
operations and division equity and cash flows for the year then ended.
These financial statements are the responsibility of the Division'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 the Gas Division of Ateco
Automotive Pty. Ltd. at June 30, 1996 and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Ernst & Young
Melbourne, Australia
September 12, 1996
<PAGE>6
GAS DIVISION OF ATECO AUTOMOTIVE PTY. LTD.
BALANCE SHEET
AT JUNE 30, 1996
ASSETS
- ------
CURRENT ASSETS
Cash $ 132,356
Net accounts receivable, less allowance for
doubtful accounts of $54,259 1,149,617
Finished goods inventory 3,158,520
Prepaid expenses and other current assets 49,802
-----------
TOTAL CURRENT ASSETS 4,490,295
-----------
INVESTMENTS
Investment in associated company 32,899
-----------
PROPERTY, PLANT & EQUIPMENT
Plant and machinery 40,185
Office equipment 57,131
Motor vehicles 148,737
-----------
246,053
Less: Accumulated depreciation (98,088)
-----------
147,965
-----------
TOTAL ASSETS $4,671,159
===========
LIABILITIES AND DIVISION EQUITY
- -------------------------------
CURRENT LIABILITIES
Accounts payable $1,944,650
Accrued and other liabilities 115,852
-----------
TOTAL CURRENT LIABILITIES 2,060,502
-----------
DIVISION EQUITY 2,610,657
-----------
TOTAL LIABILITIES AND DIVISION EQUITY $4,671,159
===========
The accompanying notes form part of these financial statements.
<PAGE>7
GAS DIVISION OF ATECO AUTOMOTIVE PTY. LTD.
STATEMENT OF OPERATIONS AND DIVISION EQUITY
YEAR ENDED JUNE 30, 1996
Sales $ 6,359,813
Cost and expenses:
Cost of sales (4,686,568)
Selling, general and administrative expenses (903,831)
------------
(5,590,399)
------------
INCOME BEFORE CORPORATE CHARGES & INCOME TAX 769,414
Corporate charges: (Note 2)
Head office administrative expense (242,000)
------------
527,414
Share of income from associated company 23,975
------------
INCOME BEFORE INCOME TAXES 551,389
Income tax expense (Note 2) (190,888)
------------
NET INCOME 360,501
Cash transfers to Ateco Automotive Pty. Ltd. (649,078)
Division equity at beginning of year 2,899,234
------------
DIVISION EQUITY AT END OF YEAR $ 2,610,657
============
The accompanying notes form part of these financial statements.
<PAGE>8
GAS DIVISION OF ATECO AUTOMOTIVE PTY. LTD.
STATEMENT OF CASH FLOW
YEAR ENDED JUNE 30, 1996
OPERATING ACTIVITIES
- --------------------
Net income $ 360,501
Adjustments to reconcile net income to net cash provided
by operating activities:-
Depreciation and amortization 28,416
Share of income from associated company (23,975)
Provision for decline in inventory value 49,713
Changes in operating assets and liabilities:
Increase in accounts receivable (376,133)
Increase in inventories (795,316)
Decrease in prepaid expenses and other
current assets 84,420
Increase in accounts payable 1,780,394
Decrease in accrued expenses and other liabilities (50,747)
-----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,057,273
INVESTING ACTIVITIES
- --------------------
Payment for property, plant and equipment (46,421)
Process from sale of property, plant and equipment 24,404
-----------
NET CASH USED BY INVESTING ACTIVITIES (22,017)
FINANCING ACTIVITIES
- --------------------
Cash transfers to Ateco Automotive Pty. Ltd. (649,078)
-----------
NET CASH USED BY FINANCING ACTIVITIES (649,078)
INCREASE IN CASH 386,178
-----------
Overdraft at beginning of year (253,822)
-----------
CASH AT END OF YEAR $ 132,356
===========
The accompanying notes form part of these financial statements.
<PAGE>9
GAS DIVISION OF ATECO AUTOMOTIVE PTY. LTD.
NOTES TO FINANCIAL STATEMENTS
AT JUNE 30, 1996
NOTE 1: PRINCIPAL ACTIVITY
- ---------------------------
The principal activity of the Ateco Automotive Pty. Ltd. Gas Division (the
Division) during the financial year was the distribution of gas conversion
kits and associated accessories. The Division's business occurs throughout
Australia and their office is located in Melbourne, Australia.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
The financial statements have been prepared in accordance with United States
(U.S.) generally accepted accounting principles and are presented in U.S.
dollars.
(a) Depreciation
Property, plant and equipment is stated on the basis of cost.
Depreciation is calculated on a straight line basis to write off the
cost of each item of property, plant and equipment over its expected
useful life.
(b) Inventories
Inventories are stated at lower of cost or net realizable value. Cost
has been determined under the average cost method.
(c) Revenue Recognition
Revenue is recognized upon shipment of goods to customers.
(d) Risk and Uncertainties
The Company sells to a diversified base of customers in Australia thereby
limiting material concentrations of credit risk. Please see Note 1 -
Principal Activity.
(e) Corporate Charges
The Division is provided with working capital on an as needed basis with
excess cash remitted to Ateco Automotive Pty. Ltd. on a monthly basis.
Group administrative expenses are allocated to the Division based on a
corporate interest charge of eight percent of the Division's monthly
inventory and debtor balance to compensate Ateco Automotive Pty. Ltd.
for group management services, legal and other administrative services
provided. Management believes this basis of cost allocation is a
reasonable estimate of services provided. If the Division were a
separate entity, the operating results and financial position might be
significantly different than presented herein.
Notes to and forming part of the financial statements.
<PAGE>10
GAS DIVISION OF ATECO AUTOMOTIVE PTY. LTD.
NOTES TO FINANCIAL STATEMENTS
AT JUNE 30, 1996
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
- -----------------------------------------------------------
(f) Income Tax
Notional income tax has been reflected in the accompanying statement of
operations as if the division's tax return was prepared on a stand-alone
basis. The effective income tax rates approximates the Australian
statutory rate. There are no significant deferred tax assets or
liabilities at June 30, 1996.
Income tax payable has been adjusted through the divisional equity
account in the accompanying balance sheet as the Division is not a
separate taxable entity and the actual results of the Division are
included in Ateco Automotive Pty Ltd.'s consolidated income tax return.
(g) Foreign Currency Translation
The functional currency of the Company is Australian Dollars (local
currency). The accompanying financial statements are presented in U.S.
Dollars. Assets and liabilities denominated in local currency are
translated at the year-end exchange rate. Revenue and expenses are
translated using the average exchange rate during the financial statement
period.
(h) Use of Estimates
Financial statements prepared in accordance with generally accepted
accounting principles require management to make estimates and judgments
that affect amounts and disclosures reported in the financial
statements. Actual results could differ from those estimates, although
management does not believe that any differences would materially affect
its financial position or reported results.
(i) Equity Accounting
The initial amount of the investment in Gas Parts (NSW) Pty. Ltd.("Gas
Parts"), an associated company, is stated at cost. The current balance
has been adjusted for the Division's share of Gas Part's earnings and
distributions.
Notes to and forming part of the financial statements.
<PAGE>11
GAS DIVISION OF ATECO AUTOMOTIVE PTY. LTD.
NOTES TO FINANCIAL STATEMENTS
AT JUNE 30, 1996
NOTE 3: EXPENDITURE COMMITMENTS
- --------------------------------
Lease expenditure commitments
Operating Leases
- -not later than one year $36,093
=======
The term of the lease on the Division's premises ceases on June 1, 1997 with
a two year renewal option.
NOTE 4: RELATED PARTY TRANSACTIONS
- -----------------------------------
The following related party transactions occurred during the financial year.
1. Sales made under normal commercial terms and conditions to an associated
company, Gas Parts (NSW) Pty. Ltd. aggregating $887,459 were included
in sales revenue of the Gas Division of Ateco Automotive Pty. Ltd.
2. An amount of $345,724 was owed to Gas Division of Ateco Automotive Pty.
Ltd. by Gas Parts (NSW) Pty. Ltd. at balance sheet date. This amount was
included in accounts receivable.
3. Ateco Automotive Pty. Ltd. has a note receivable of $157,500 payable on
demand from Gas Parts (NSW) Pty. Ltd.
NOTE 5: SUBSEQUENT EVENTS
- --------------------------
Ateco Automotive Pty. Ltd. entered into an agreement dated July 1, 1996 to
sell substantially all the assets and liabilities of the Division to another
corporation.
Notes to and forming part of the financial statements.
<PAGE>12
AIRSENSORS, INC. AND SUBSIDIARIES
AND
GAS DIVISION OF ATECO AUTOMOTIVE PTY LTD AND SUBSIDIARY
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED)
Effective July 1, 1996, the registrant acquired certain assets of the Gas
Division of Ateco Automotive Pty. Ltd. ("Ateco") for cash in the amount of
approximately $6,500,000. In order to effectuate the transaction, IMPCO
Technologies Inc. ("IMPCO Inc.") a wholly owned subsidiary of the Registrant,
established a wholly owned subsidiary in Australia, IMPCO Technologies Pty.
Limited ("IMPCO Ltd."). The assets, which were acquired by IMPCO Ltd.,
consist primarily of receivables, inventory, equipment, a note, business
goodwill, distribution rights in Australia, and a 50% interest in Ateco's
sub-distributor.
The purchase price was financed through approximately $4,000,000 of term
loans provided by Bank of America NT&SA and its Sydney Australia branch.
The term loans are both three-year loans with a five-year amortization
schedule with interest at market rates. In addition, accounts receivables due
to IMPCO Inc. by Ateco, totaling approximately $1,852,000, were also offset
against the purchase price. The balance of the purchase price was paid
with proceeds from IMPCO Inc.'s existing line of credit with Bank of
America NT&SA.
The following pro forma statements have been prepared to illustrate the
effect of the acquisition, which is being accounted for as a purchase.
The unaudited pro forma condensed balance sheets combine the balance sheets
of AirSensors, Inc. and its subsidiaries as of April 30, 1996 and Ateco as of
June 30, 1996. The unaudited pro forma condensed income statements combine
the income statements of AirSensors Inc. and its subsidiaries for the year
ended April 30, 1996 and Ateco for the year ended June 30, 1996. The pro
forma information is based upon the historical financial statements of the
respective entities while the pro forma adjustments on which they are based
are described in the accompanying notes.
The AirSensors, Inc. unaudited pro forma condensed combined financial
statements are presented for illustrative purposes only and are not
necessarily indicative of the consolidated financial position or consolidated
results of operations of AirSensors, Inc. that would have been reported had
the Acquisition occurred on the dates indicated, nor do they represent a
forecast of the consolidated financial position of AirSensors, Inc. at any
future date or the consolidated results of operations of AirSensors, Inc. at
any future period. Amounts allocated to assets purchased from Ateco by IMPCO
Ltd. are based on estimated fair values derived from information currently
available. The purchase price allocation is preliminary and based on
management's best estimate.
The unaudited pro forma condensed combined financial statements should be
read in conjunction with the related notes thereto and the historical
consolidated financial statements of AirSensors, Inc. and subsidiaries and
the historical Ateco financial statements.
<PAGE>13
<TABLE>
<CAPTION>
AIRSENSORS, INC. AND SUBSIDIARIES
AND
GAS DIVISION OF ATECO AUTOMOTIVE PTY LTD AND SUBSIDIARY
PRO FORMA CONDENSED COMBINED BALANCE SHEETS (UNAUDITED)
AS OF APRIL 30, AND JUNE 30, 1996
(Dollars in thousands)
Historical Pro Forma Adjustments
---------------------- --------------------------
ASSETS AirSensors Ateco Pro Forma
April 30, June 30, DR CR Combined
---------- ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 811 $ 132 $ 9(b) 132(a) $ 820
Net accounts receivable 9,514 1,150 517(b) 3,002(a)(b) 8,179
Total inventories 11,438 3,159 416(b) 903(a) 14,110
Other current assets 2,815 50 270(b) 197(a)(b) 2,938
---------- ---------- ------------ ------------ ----------
Total current assets 24,578 4,491 1,212 4,234 26,047
Net equipment and leasehold improvements 6,478 148 94(b) 103(a) 6,617
Investment in subsidiary - 33 33(b) -
Intangibles arising from acquisitions 5,226 - 3,585(a) 8,811
Other assets 1,446 - 1,446
---------- ---------- ------------ ------------ ----------
Total assets $ 37,728 $ 4,672 $ 4,891 $ 4,370 $ 42,921
========== ========== ============ ============ ==========
</TABLE>
(See accompanying notes)
<PAGE>14
<TABLE>
<CAPTION>
AIRSENSORS, INC. AND SUBSIDIARIES
AND
GAS DIVISION OF ATECO AUTOMOTIVE PTY LTD AND SUBSIDIARY
PRO FORMA CONDENSED COMBINED BALANCE SHEETS (UNAUDITED)
AS OF APRIL 30, AND JUNE 30, 1996
(Dollars in thousands)
Historical Pro Forma Adjustments
---------------------- --------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY AirSensors Ateco Pro Forma
April 30, June 30, DR CR Combined
---------- ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Current liabilities:
Notes payable 541 - 541
Accounts payable 3,532 1,945 2,342(a)(b) 894(a)(b) 4,029
Accrued payroll obligations 1,701 1,701
Accrued warranty obligations 470 470
Income taxes payable 706 706
Other accrued expenses 1,598 116 256(a)(b) 328(a)(b) 1,786
Current portion of term loans 718 - 794(a) 1,512
---------- ---------- ------------ ------------ ---------
Total current liabilities 9,266 2,061 2,598 2,016 10,745
Line of credit 3,400 - 528(a) 3,928
Term loan - Bank of America NT&SA 1,435 - 3,175(a) 4,610
Term loan - DEPA Holding B.V. 2,821 - 2,821
Other long-term liabilities 1,167 - 6(b) 1,173
Minority interest 383 - 32(b) 415
Commitments and contingencies - - -
Stockholders' equity:
1993 Series 1 preferred stock, $.01 par
value, 5,950 shares authorized, issued
and outstanding, $5,950,000 liquidation
value 5,650 - 5,650
Common stock, $.001 par value, authorized
25,000,000 shares; 5,654,568 issued and
outstanding at April 30, 1996 6 6
Additional paid-in capital relating to
common stock 28,747 - 28,747
Retained earnings(deficit) (15,112) 2,611 2,676(a) 65(b) (15,112)
Accumulated translation adjustment (35) 27(a) (62)
---------- ---------- ------------ ------------ ---------
Total stockholders' equity 19,256 2,611 2,703 65 19,229
Total liabilities and
stockholders' equity $ 37,728 $ 4,672 $ 5,301 $ 5,822 $ 42,921
========== ========== ============ ============ =========
(See accompanying notes)
</TABLE>
<PAGE>15
<TABLE>
<CAPTION>
AIRSENSORS, INC. AND SUBSIDIARIES
AND
GAS DIVISION OF ATECO AUTOMOTIVE PTY LTD AND SUBSIDIARY
PRO FORMA CONDENSED COMBINED INCOME STATEMENTS (UNAUDITED)
FISCAL YEAR ENDED APRIL 30, AND JUNE 30, 1996
(In thousands, except net income per share amounts)
Historical Pro Forma Adjustments
---------------------- --------------------------
AirSensors Ateco Pro Forma
April 30, June 30, DR CR Combined
---------- ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Net revenues $ 51,575 $ 6,360 $ 4,636(c)(d) 3,254(c) $ 56,553
Costs and expenses:
Cost of sales 32,011 4,687 2,914(c)(d) 4,636(c)(d) 34,976
Research & development expense 7,171 - 7,171
Selling, general & administrative 8,261 1,146 667(c)(e) 165(d) 9,909
---------- ---------- ------------ ------------ ----------
Total costs and expenses 47,443 5,833 3,581 4,801 52,056
---------- ---------- ------------ ------------ ----------
Operating income 4,132 527 8,217 8,055 4,497
Financing charges 504 - 604(f) 1,108
---------- ---------- ------------ ------------ ----------
Income before income taxes and
minority interest in income of
consolidated subsidiary 3,628 527 8,821 8,055 3,389
Provision (benefit) for income taxes (1,349) 191 27(c) 154(f) (1,285)
Income from associated company - (24) 24(c) -
Minority interest in earnings 306 - 24(c) 330
---------- ---------- ------------ ------------ ----------
Net income 4,671 360 8,896 8,209 4,344
Dividends on preferred stock 610 - 610
---------- ---------- ------------ ------------ ----------
Net income applicable to common stock $ 4,061 $ 360 $ 8,896 $ 8,209 $ 3,734
========== ========== ============ ============ ==========
Net income per share:
Primary $ .65 $ .60
======= =======
Fully diluted $ .63 .59
======= =======
Shares used in per share calculation:
Primary 6,648 6,648
======= =======
Fully diluted 7,771 7,771
======= =======
(See accompanying notes)
</TABLE>
<PAGE>16
AIRSENSORS, INC. AND SUBSIDIARIES
AND
GAS DIVISION OF ATECO AUTOMOTIVE PTY LTD. AND SUBSIDIARY
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
---------------------
The accompanying pro forma condensed combined financial statements
present the combined financial position and results of operations of
AirSensors, Inc. and the Gas Division of Ateco Automotive Ltd.
and its subsidiary ("Ateco"). The acquisition is accounted for as a
purchase and, accordingly, the purchase price will be allocated to the
assets and liabilities of Ateco based on their fair values at the
date of acquisition.
2. Pro forma adjustments
---------------------
The pro forma condensed combined financial statements give effect
to the following adjustments:
a. To reflect the acquisition of certain assets and liabilities
of Ateco, including:
(i) the elimination of net tangible assets of Ateco that were
not purchased by the Company;
(ii) adjusting the fair market values of the assets acquired
by the Company at the date of acquisition and record the
excess of the purchase price over the fair values of the
net assets acquired.
The Company acquired certain assets from Ateco for $6,500,000.
The amount of the consideration was determined through negotiations
between the Company and Ateco. The excess of the purchase price
over the fair values of the net assets acquired was approximately
$3,585,000 and has been recorded as goodwill, which is being
amortized on a straight-line basis over 20 years.
This excess represents the goodwill of the business, including the
full benefit of distribution rights in Australia, and customer and
prospect lists.
b. To record the net tangible assets of Ateco's interest in Gas
Parts (N.S.W.) Pty. Ltd ("Gas Parts") as a result of a change in
accounting from the equity method to consolidation. The assets
and liabilities of Gas Parts are consolidated based on their fair
values at the date of acquisition.
c. To record the Income Statement of Gas Parts as a result of a
change in accounting from the equity method to consolidation to
create a consolidated Income Statement.
<PAGE>17
d. To record the elimination of intercompany sales and other
intercompany adjustments between AirSensors, Inc. and Ateco.
e. To reflect AirSensors, Inc. straight line amortization (over a
twenty year period) of the excess of the purchase price over the
fair values of the net assets acquired.
f. To record increased interest expense and the pro forma
adjustments on provision for taxes based on income (loss) due
to the acquisition.
<PAGE>18
