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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): JULY 1, 1998
LABORATORY SPECIALISTS OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
OKLAHOMA 0-24988 73-145065
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
101 PARK AVENUE, SUITE 810
OKLAHOMA CITY, OKLAHOMA 73102
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (405) 232-9800
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 1, 1998, Laboratory Specialists of America, Inc. (the "Company")
acquired from TOXWORX Laboratories, Inc., a California corporation ("TLI"),
certain intangible assets pursuant to an Asset Purchase Agreement dated June 8,
1998 (the "Purchase Agreement"). The assets purchased included the customer
list of TLI and all contracts, contract rights and agreements, correspondence
with the customers for which TLI had provided drug testing services, all rights
to the business conducted by TLI related to drug testing, and all rights in the
name "Tox Worx Laboratories" or "Tox Worx Laboratories, Inc." and all trade
names, trade marks and service marks, and registrations thereof and applications
for registration thereof, logos, designs and intellectual rights related to or
utilized in the market of drug testing services provided by TLI.
Pursuant to the Purchase Agreement, (i) the Company paid $2,400,000 to TLI
on July 1, 1998 in purchase of the acquired assets. The Company intends to
consolidate and assimilate the purchased assets with those of the Company. In
connection with the asset purchase, the Company will continue the drug testing
marketing operations of TLI and intends to retain the marketing personnel
employed by TLI in order to maintain TLI's market share of drug testing
services. However, there is no assurance that the Company will be able to
maintain such market share. All drug testing operations formerly conducted and
performed by TLI at its laboratory facilities in Woodland Hills, California,
will be conducted and performed at the laboratory facilities of Laboratory
Specialists, Inc. in Gretna, Louisiana. It is currently anticipated by
management of the Company that the laboratory facilities and the capacity
thereof will be adequate to conduct and perform the increased drug testing
volume acquired by the Company from TLI.
In connection with the assets purchased, because of the nature of the
assets purchased by the Company from TLI, it is anticipated that the Company
will be required to record substantially all of the purchase price of the assets
purchased as an intangible asset which will be amortized on a straight-line
basis over the estimated period that the Company will be benefitted by the
purchase of such assets. The carrying value and recoverability of such
intangible assets will be periodically reviewed by management of the Company.
If the facts and circumstances suggest that such intangible assets may be
impaired, the carrying value of such assets will be adjusted which will result
in an immediate charge against income during the period of adjustment an/or the
length of the remaining amortization period may be shortened which will result
in an increase in the amount of amortization during the period of adjustment and
each period thereafter until fully amortized. Once adjusted, there can be no
assurance that there will not be further adjustments for impairment and
recoverability in future periods of such intangible assets. Of the various
factors to be considered by management of the Company in determining impairment
of such intangible assets, the most significant will be (i) the loss of all or a
portion of the drug-testing customer base acquired from TLI, (ii) losses from
operations, (iii) developments within the drug testing industry, including the
Company's inability to maintain its market share, development of drug testing
technologies, imposition of additional regulatory and certification
requirements, and (iv) loss or suspension for an extended period of laboratory
certification, especially by the Substance Abuse and Mental Health Services
Administration. In the event management of the Company determines that such
intangible assets have become impaired, the adjustments for impairment and
recoverability may occur during a period of operations in which the Company has
sustained losses or has only marginal profitability from operations, and the
impairment and/or increased amortization amount will either increase such losses
from operations or reduce profitability.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS AND EXHIBITS.
In accordance with Rule 3-05 of Regulation S-X, financial statements
related to the acquisition of the assets purchased by the Company from TLI are
not required to be included in this Report.
(b) PRO FORMA FINANCIAL INFORMATION.
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In accordance with Article 11 of Regulation S-X, pro forma financial
information related to the acquisition of the assets purchased by the Company
from TLI is not required to be included in this Report.
(c) EXHIBITS.
2.1 Asset Purchase Agreement between Registrant and TOXWORX Laboratories,
Inc., dated June 8, 1998 is incorporated by reference to Exhibit 10.19
of Registration Statement No. 333-58473 as filed with the Commission
on July 2, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LABORATORY SPECIALISTS
OF AMERICA, INC.
(Registrant)
By: /S/ JOHN SIMONELLI
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John Simonelli
Chief Executive Officer
Date: July 10, 1998
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