SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 13, 1998
STOCKER & YALE, INC.
(Exact name of Registrant as specified in its charter)
Massachusetts 0-5460 04-2114473
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
32 Hampshire Road, Salem, New Hampshire 03079
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
(603) 893-8778
<PAGE>
The undersigned Registrant hereby amends Item 7 of its Current Report
on Form 8-K filed May 27, 1998 to read in its entirety as follows:
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired. Financial Statements for
Lasiris Inc. are filed with this report as Attachment A.
(b) Pro Forma Financial Information. Pro forma Financial Information
for the Registrant is filed with this report as Attachment B.
(c) Exhibits
*2.1 Offer of Purchase and Sale by and among Stocker & Yale, Inc., Lasiris,
Inc., the stockholders of Lasiris, Inc. and certain other parties named
therein, dated March 14, 1998.
*10.1 Voting, Support and Exchange Agreement between Lasiris Holding, Inc.,
Stocker & Yale, Inc. and the stockholders of Lasiris, Inc. and certain
other parties named therein, dated as of May 13, 1998.
*10.2 Employment Agreement by and among Lasiris, Inc., Stocker & Yale, Inc.
and Alain Beauregard, dated as of May 13, 1998.
*10.3 Employment Agreement by and among Lasiris, Inc., Stocker & Yale, Inc.
and Luc Many, dated as of May 13, 1998.
*10.4 Lasiris, Inc. Executive Incentive Compensation Plan
- ----------------------
* Previously filed.
2
<PAGE>
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.
STOCKER & YALE, INC.
(Registrant)
By: /s/ Susan A. H. Sundell
--------------------------------
Date: July 27, 1998 Susan A. H. Sundell
Senior Vice President, Finance
3
<PAGE>
EXHIBIT INDEX
-------------
*2.1 Offer of Purchase and Sale by and among Stocker & Yale, Inc.,
Lasiris, Inc., the stockholders of Lasiris, Inc. and certain
other parties named therein, dated March 14, 1998.
*10.1 Voting, Support and Exchange Agreement between Lasiris
Holding, Inc., Stocker & Yale, Inc. and the stockholders of
Lasiris, Inc. and certain other parties named therein, dated
as of May 13, 1998.
*10.2 Employment Agreement by and among Lasiris, Inc., Stocker &
Yale, Inc. and Alain Beauregard, dated as of May 13, 1998.
*10.3 Employment Agreement by and among Lasiris, Inc., Stocker &
Yale, Inc. and Luc Many, dated as of May 13, 1998.
*10.4 Lasiris, Inc. Executive Incentive Compensation Plan
- -----------------------
* Previously filed.
4
<PAGE>
ATTACHMENT A
------------
| Coopers | Laliberte
| & Lybrand | Lanctot
- --------------------------------------------------------------------------------
Lasiris Inc.
Financial Statements
For the period from February 1, 1997 to December 31, 1997
and for the year ended January 31, 1997
(expressed in Canadian dollars)
- --------------------------------------------------------------------------------
<PAGE>
| Coopers | Laliberte | chartered accountants | telephone: (514) 876-1500
| & Lybrand | Lanctot | | fax : (514) 876-1502
| | | Le Windsor |
| | | 1170 Peel Street |
| | | Montreal, Quebec |
| | | Canada HSB 4T2 |
March 27, 1998
Auditors' Report
To the Directors of
Lasiris Inc.
We have audited the balance sheets of Lasiris Inc. as at December 31, 1997 and
January 31, 1997 and the statements of earnings, retained earnings and changes
in financial position for the period from February 1, 1997 to December 31, 1997
and for the year ended January 31, 1997. 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 audits.
We conducted our audits in accordance with generally accepted auditing standards
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance 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.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at December 31, 1997 and
January 31, 1997 and the results of its operations and the changes in its
financial position for the period and the year then ended respectively in
accordance with generally accepted accounting principles in Canada.
Coopers & Lybrand
Chartered Accounts
General Partnership
<PAGE>
Lasiris Inc.
Balance Sheets as at December 31, 1997 and January 31, 1997
- --------------------------------------------------------------------------------
(expressed in Canadian dollars)
<TABLE>
<CAPTION>
December 31, January 31,
1997 1997
$ $
Assets
<S> <C> <C>
Current assets
Cash and term deposits (note 2) -- 10,845
Accounts receivable (notes 2 and 3) 1,285,568 807,625
Research and development tax credits 235,384 216,452
Supplies inventory (note 2) 857,662 429,253
Prepaid expenses 18,149 15,604
--------------- ---------------
2,396,763 1,479,779
Capital assets (notes 4 and 5) 276,839 162,818
--------------- ---------------
2,673,602 1,642,597
=============== ===============
Liabilities
Current liabilities
Bank advances (note 2) 216,491 --
Accounts payable and accrued liabilities 902,988 661,806
Income taxes 226,538 98,000
Current portion of long-term debt 50,000 96,672
Current portion of deferred government assistance 1,925 2,046
--------------- ---------------
1,397,942 858,524
Long-term debt (note 5) 50,000 --
Deferred government assistance (note 6) 10,909 12,834
Deferred income taxes 45,500 31,500
--------------- ---------------
1,504,351 902,858
--------------- ---------------
Commitments (note 10)
Shareholders' Equity
Capital stock (note 7) 272,890 272,890
Contributed surplus (note 7) -- 49,660
Retained earnings 896,361 417,189
--------------- ---------------
1,169,251 739,739
--------------- ---------------
2,673,602 1,642,597
=============== ===============
</TABLE>
See accompanying notes to the financial statements.
- --------------------------------------------------------------------------------
<PAGE>
Lasiris Inc.
Statements of Retained Earnings
For the period from February 1, 1997 to December 31, 1997 and for the year ended
January 31, 1997
- --------------------------------------------------------------------------------
(expressed in Canadian dollars)
<TABLE>
<CAPTION>
December 31, January 31,
1997 1997
$ $
(eleven (twelve
months) months)
<S> <C> <C>
Balance-- Beginning of period 417,189 15,231
Net earnings for the period 567,512 401,958
--------------- ---------------
984,701 417,189
Redemption of a stock option to purchase
Class A shares (note 7) 88,340 --
--------------- ---------------
Balance-- End of period 896,361 417,189
=============== ===============
</TABLE>
See accompanying notes to the financial statements.
- --------------------------------------------------------------------------------
<PAGE>
Lasiris Inc.
Statements of Earnings
For the period from February 1, 1997 to December 31, 1997 and for the year ended
January 31, 1997
- --------------------------------------------------------------------------------
(expressed in Canadian dollars)
<TABLE>
<CAPTION>
December 31, January 31,
1997 1997
$ $
(eleven (twelve
months) months)
<S> <C> <C>
Revenue
Research contracts, laser-based structured light
and holographic products 5,265,585 3,417,938
--------------- ---------------
Operating expenses 2,980,787 1,888,039
Research and development costs --
net of tax credits and grants of $227,635
(January 31, 1997 - $236,483) 231,451 144,014
--------------- ---------------
3,212,238 2,032,053
--------------- ---------------
Gross Profit 2,053,347 1,385,885
--------------- ---------------
Expenses
Selling and administrative expenses 1,237,400 832,619
Financial charges less income 9,435 21,808
--------------- ---------------
1,246,835 854,427
--------------- ---------------
Earnings before income taxes 806,512 531,458
--------------- ---------------
Provision for income taxes (note 9)
Current 225,000 98,000
Deferred 14,000 31,500
--------------- ---------------
239,000 129,500
--------------- ---------------
Net Earnings for the period (note 8) 567,512 401,958
=============== ===============
</TABLE>
See accompanying notes to the financial statements.
- --------------------------------------------------------------------------------
<PAGE>
Lasiris Inc.
Statements of Changes in Financial Position
For the period from February 1, 1997 to December 31, 1997 and for the year ended
January 31, 1997
- --------------------------------------------------------------------------------
(expressed in Canadian dollars)
<TABLE>
<CAPTION>
December 31, January 31,
1997 1997
$ $
(eleven (twelve
months) months)
<S> <C> <C>
Operating activities
Net earnings for the period 567,512 401,958
Items not affecting cash--
Amortization of capital assets 42,798 27,216
Amortization of government assistance (2,046) (6,676)
Deferred income taxes 14,000 31,500
--------------- ---------------
622,264 453,998
Net change in non-cash operating working capital balances (558,109) (355,546)
--------------- --------------
Cash provided by operating activities 64,155 98,452
--------------- ---------------
Financing activities
Increase (decrease) in long-term debt 3,328 (140,650)
Redemption of a stock option to purchase Class A shares (138,000) --
--------------- ---------------
Cash used in financing activities (134,672) (140,650)
--------------- --------------
Investing activities
Purchase of capital assets and cash used in investing activities (156,819) (56,846)
--------------- --------------
Decrease in cash (227,336) (99,044)
Cash and term deposits - Beginning of period 10,845 109,889
--------------- ---------------
Cash and term deposits (bank advances) - End of period (216,491) 10,845
=============== ===============
</TABLE>
See accompanying notes to the financial statements.
- --------------------------------------------------------------------------------
<PAGE>
Lasiris Inc.
Notes to Financial Statements
For the period from February 1, 1997 to December 31, 1997 and for the year ended
January 31, 1997
- --------------------------------------------------------------------------------
(expressed in Canadian dollars)
1. Significant accounting policies
Management estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires the utilization of estimates
that affect the reported amounts of assets and liabilities, disclosures
of contingent assets and liabilities, at the balance sheet date and the
reported amounts of revenue and expenses. Actual results could differ
from those estimates.
Fair value of financial instruments
The company has estimated the fair value of its financial instruments
based on current interest rates, related market values and current
pricing of financial instruments with comparable terms. The carrying
value of these financial instruments, such as cash and term deposits,
accounts receivable, the excess of outstanding cheques over the bank
balances and the accounts payable and accrued liabilities, approximates
their fair values, unless otherwise indicated.
Supplies inventory
Supplies inventory is carried at the lower of cost determined on a
first-in, first-out basis and market value. Market value is defined as
replacement cost.
Capital assets
Capital assets are amortized on the declining balance method at the rate
of 20% for office furniture and equipment and 15% for optical material
and research equipment. Licenses and leasehold improvements are
amortized on a straight-line basis over five years.
Income taxes
The company accounts for income taxes using the deferral method of tax
allocation. Under this method, timing differences between accounting
income and taxable income give rise to deferred income taxes.
They are not adjusted for subsequent changes in income tax rates.
Research and development costs and marketing expenses
All research and development costs and marketing expenses are expensed
during the period in which they are incurred.
Government assistance
Government assistance for capital assets is amortized at the respective
rates of the related capital assets. In addition, government assistance
for research and development and current expenses for the period is
recorded as a reduction of the related expenses.
Foreign currency translation
Monetary assets and liabilities in foreign currencies are translated at
year-end rates. Revenue and expenses are translated at the rates
prevailing at the transaction dates. Gains and losses arising on
translation are included in earnings for the period.
1
<PAGE>
Lasiris Inc.
Notes to Financial Statements
For the period from February 1, 1997 to December 31, 1997 and for the year ended
January 31, 1997
- --------------------------------------------------------------------------------
(expressed in Canadian dollars)
2. Collateral for bank advances
The company has a line of credit of $500,000 bearing interest at prime
plus 2%.
Supplies inventory, a hypothecation of all accounts receivable and other
movables and a term deposit of $4,461 have been pledged as collateral
for bank advances.
3. Accounts receivable
<TABLE>
<CAPTION>
December 31, January 31,
1997 1997
$ $
<S> <C> <C>
Trade 1,203,872 692,173
Other 81,696 56,034
Government assistance -- 59,418
--------------- ---------------
1,285,568 807,625
=============== ===============
</TABLE>
4. Capital Assets
<TABLE>
<CAPTION>
December 31, January 31,
1997 1997
---------------------------------------------------- ---------------
<S> <C> <C> <C> <C>
Accumulated
Cost amortization Net Net
$ $ $ $
Licenses 14,916 8,192 6,724 5,950
Office furniture and
equipment 103,058 36,004 67,054 33,992
Optical material 372,687 215,357 157,330 113,422
Research equipment 43,253 4,875 38,378 --
Leasehold improvements 10,504 3,151 7,353 9,454
-------------- ---------------- --------------- ---------------
544,418 267,579 276,839 162,818
============== ================ =============== ===============
</TABLE>
2
<PAGE>
Lasiris Inc.
Notes to Financial Statements
For the period from February 1, 1997 to December 31, 1997 and for the year ended
January 31, 1997
- --------------------------------------------------------------------------------
(expressed in Canadian dollars)
5. Long-term debt
(a) Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31, January 31,
1997 1997
$ $
<S> <C> <C>
Bank loan bearing interest at prime plus 1.75%
capital payable in 24 equal payments of
$4,167 starting January 17, 1998 100,000 --
Participating loan from the Societe de
developpement industriel du Quebec -- 96,672
--------------- ---------------
100,000 96,672
Less: Current portion 50,000 96,672
--------------- ---------------
50,000 --
=============== ===============
</TABLE>
(b) Equipment is pledged as collateral for the bank loan.
6. Deferred government assistance
<TABLE>
<CAPTION>
December 31, January 31,
1997 1997
$ $
<S> <C> <C>
Relating to capital assets, less accumulated amortization 12,834 14,880
Less: Current portion 1,925 2,046
--------------- ---------------
10,909 12,834
=============== ===============
</TABLE>
7. Capital stock
Authorized --
Unlimited number of the following classes of shares, without
nominal value-
Class A, voting and participating
Class B, non-voting and non-participating, 8%
non-cumulative and non-preferential
dividend, retractable at their paid-in value
Class C, non-voting and non-participating, 8%
non-cumulative and preferential dividend to Class A
and B, redeemable at their paid-in value plus the
amount of the accumulated premium payable upon full
redemption
Issued and fully paid --
<TABLE>
<CAPTION>
December 31, January 31,
1997 1997
$ $
<S> <C> <C>
161,670 Class A shares 272,890 272,890
=============== ===============
</TABLE>
3
<PAGE>
Lasiris Inc.
Notes to Financial Statements
For the period from February 1, 1997 to December 31, 1997 and for the year ended
January 31, 1997
- --------------------------------------------------------------------------------
(expressed in Canadian dollars)
As a result of obtaining participating loans in the past, the company
granted the lender a stock option for a maximum of 20,204 Class A
shares. During the period, the company redeemed this stock option to
purchase Class A shares in exchange for $138,000 cash. The redemption
price of this option has been recorded as a reduction of contributed
surplus and retained earnings in the amounts of $49,660 and $88,340
respectively.
8. Net earnings for the period
Net earnings for the period include the following expenses:
<TABLE>
<CAPTION>
December 31, January 31,
1997 1997
$ $
(eleven (twelve
months) months)
<S> <C> <C>
Amortization of capital assets 42,798 27,216
=============== ===============
Amortization of government assistance (2,046) (6,676)
=============== ==============
Interest on long-term debt 1,986 14,026
=============== ===============
</TABLE>
9. Income taxes
The income tax rate differs from the basic rate due to the following:
<TABLE>
<CAPTION>
December 31, January 31,
1997 1997
% %
<S> <C> <C>
Basic federal and provincial combined rate 38.0 38.0
Manufacturing and processing income deduction (3.9) (1.9)
Small business deduction (3.6) (6.0)
Non-taxable items -- (3.4)
Other (0.9) (2.3)
--------------- ---------------
29.6 24.4
=============== ===============
</TABLE>
10. Commitments
The company's commitments under a long-term operating lease for premises
amount to $288,067. Under the terms of the lease, annual rental payments
for the next four years are as follows:
1998 $ 70,841
1999 83,867
2000 84,227
2001 49,132
4
<PAGE>
Lasiris Inc.
Notes to Financial Statements
For the period from February 1, 1997 to December 31, 1997 and for the year ended
January 31, 1997
- --------------------------------------------------------------------------------
(expressed in Canadian dollars)
11. Credit Risk
The company continually monitors its clients' credit. It establishes the
provision for doubtful accounts based on the credit risk applicable to
each client. Management believes that there is non-significant credit
risk as at December 31, 1997.
12. United States accounting principles
The financial statements have been prepared in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP"). In
certain respects, Canadian GAAP differs from accounting principles
generally accepted in the United States ("U.S. GAAP").
Net earnings and shareholders' equity
(a) Under U.S. GAAP, the redemption of the stock option should be
recorded as an expense in the year. This difference in GAAP would
result in a decrease of $138,000 to reported net earnings for the
period ended December 31, 1997. There would be no changes to the
total amount of shareholders' equity.
(b) Under Canadian GAAP, the company follows the deferral method of
providing for income taxes while under U.S. GAAP, the liability
method would be used. Under this method, deferred income taxes
are calculated based on the difference between accounting and tax
values of assets and liabilities. The current tax rate is used to
calculate deferred income taxes at the balance sheet date. This
difference in GAAP would not result in a material change to the
company's financial statements.
Cash flows
(c) Under U.S. GAAP, the following amounts would be reported:
<TABLE>
<CAPTION>
Period ended Year ended
December 31, January 31,
1997 1997
$ $
(eleven (twelve
months) months)
<S> <C> <C>
Net cash provided by (used in):
Operating activities 64,155 98,452
Financing activities 101,961 (135,532)
Investment activities (156,819) (56,846)
-------------- ---------------
Net increase (decrease) in cash 9,297 (93,926)
=============== ===============
Cash - End of period 20,798 11,501
=============== ===============
</TABLE>
(d) Under U.S. GAAP, the definition of cash in the statement of cash
flows would exclude short-term deposits with original maturities
of more than three months and bank indebtedness which amounted to
$4,462 and $241,751 respectively as at December 31, 1997 (January
31, 1997 - $4,462 and $5,118). Under U.S. GAAP, changes in
short-term deposits with original maturities of more than three
months would be disclosed as an investment activity and changes
in bank indebtedness would be disclosed as a financing activity.
5
<PAGE>
Lasiris Inc.
Notes to Financial Statements
For the period from February 1, 1997 to December 31, 1997 and for the year ended
January 31, 1997
- --------------------------------------------------------------------------------
(expressed in Canadian dollars)
(e) Canadian GAAP allows the disclosure of subtotal of the amount of
cash provided by operating activities before cash provided by
non-cash operating working capital items. U.S. GAAP requires a
statement of cash flows without subtotal.
(f) The net change in non-cash operating working capital balances is
as follows:
<TABLE>
<CAPTION>
Period ended Year ended
December 31, January 31,
1997 1997
$ $
(eleven (twelve
months) months)
<S> <C> <C>
Decrease (increase) in:
Accounts receivable (477,943) (444,892)
Research and development tax credit (18,932) (34,805)
Supplies inventory (428,409) (179,586)
Prepaid expenses (2,545) 19,817
Increase in:
Accounts payable and accrued liabilities 241,182 185,920
Income taxes 128,538 98,000
--------------- ---------------
(558,109) (355,546)
============== ==============
</TABLE>
6
<PAGE>
Lasiris Inc.
Notes to Financial Statements
For the period from February 1, 1997 to December 31, 1997 and for the year ended
January 31, 1997
- --------------------------------------------------------------------------------
(expressed in Canadian dollars)
Other disclosure
(g) The disclosure of the following amounts is required under U.S. GAAP:
<TABLE>
<CAPTION>
Period ended Year ended
December 31, January 31,
1997 1997
$ $
(eleven (twelve
months) months)
<S> <C> <C>
Payments under operating lease 55,997 54,614
Interest paid 4,328 14,026
Income taxes paid 100,138 --
December 31, January 31,
1997 1997
$ $
Trade accounts receivable 1,203,872 669,494
Allowance for doubtful accounts -- --
Other accounts receivable 81,696 138,131
--------------- ---------------
1,285,568 807,625
=============== ===============
Trade accounts payable 619,836 412,180
Accrued employees costs 214,175 176,543
Other accounts payable 68,977 73,083
--------------- ---------------
902,988 661,806
=============== ===============
</TABLE>
7
<PAGE>
Lasiris, Inc.
Balance Sheet
Unaudited and Expressed in Canadian Dollars
<TABLE>
<CAPTION>
March 31, 1998
ASSETS
<S> <C>
Current Assets
Cash and cash equivalents
Accounts receivable, net of allowance for doubtful accounts 1,067,762
Prepaid expenses 16,717
Inventory 874,947
Research and development tax credits 141,076
----------------------
Total Current Assets 2,100,502
----------------------
Property Plant and Equipment, Net 268,569
----------------------
Other Assets 8,828
----------------------
2,377,899
======================
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities
Current Bank debt 85,195
Accounts Payable 702,109
Accrued Expenses and Taxes 235,206
----------------------
Total Current Liabilities 1,022,510
----------------------
Long Term Debt 87,500
----------------------
Deferred Taxes 45,500
----------------------
Deferred Government Assistance 12,545
----------------------
STOCKHOLDERS' INVESTMENT
Capital Stock 272,890
Retained Earnings 936,954
----------------------
Total Stockholders Investment 1,209,844
----------------------
2,377,899
======================
</TABLE>
<PAGE>
Lasiris, Inc.
Statement of Operations
Unaudited and Expressed in Canadian Dollars
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1998
<S> <C>
Net Sales 1,503,417
Cost of Sales 776,416
---------------
Gross Profit 727,002
Selling Expenses 202,397
General & Administrative Expenses 373,787
Research & Development Expenses 83,193
---------------
Operating Income 67,625
Financing Expenses 9,032
---------------
Income Before Taxes 58,593
---------------
Income Tax Expense 18,000
---------------
Net Income 40,593
===============
</TABLE>
<PAGE>
Lasiris, Inc.
Statement of Changes in Financial Position
Unaudited and Expressed in Canadian Dollars
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1998
<S> <C>
Operating Activities
Net earnings 40,593
Items not affecting cash -
Amortization of capital assets 13,100
Amortization of governmental assistance (289)
---------------------
53,404
Net change in non-cash working capital balances (27,972)
---------------------
Cash provided by operating activities 25,432
---------------------
Financing Activities
Decrease in long-term debt (12,500)
----------------------
Cash used in financing activities (12,500)
----------------------
Investing Activities
Purchase of capital assets and cash used in investing activities (12,932)
---------------------
Increase in cash and cash equivalents --
Cash and cash equivalents - Beginning of period --
----------------------
Cash and cash equivalents - End of period --
======================
</TABLE>
<PAGE>
Lasiris, Inc.
Notes to Unaudited March 31, 1998 Financial Statements
General
The interim financial statements have been prepared by Lasiris, Inc. ("Lasiris")
without audit and, in the opinion of management reflect all adjustments of a
normal recurring nature necessary for a fair statement of (a) the result of
operations for the three months ended March 31, 1998, (b) the financial position
at March 31, 1998 and (c) the cash flows for the three months period ended March
31, 1998. The interim financial statements are prepared in accordance with
Canadian GAAP, and no material adjustments are required to convert to U.S. GAAP.
Interim results are not necessarily indicative of results for a full year.
These interim financial statements and notes are condensed, do not contain
certain information included in the audited annual financial statements, and
should be read in conjunction with Lasiris' audited annual financial statements
and notes included elsewhere in this 8-K/A.
<PAGE>
ATTACHMENT B
PROFORMA FINANCIAL STATEMENTS
Overview
On May 13, 1998, Stocker & Yale, Inc. (the "Company") acquired Lasiris, Inc.
("Lasiris"), a Canadian manufacturer of industrial lasers for the machine vision
and industrial inspection industries. The Company acquired Lasiris through
Lasiris Holdings, Inc., a newly formed New Brunswick Corporation and a
subsidiary of the Company ("LHI"). Lasiris will be operated as a wholly-owned
Canadian subsidiary.
In connection with the acquisition, the stockholders of Lasiris received an
aggregate of approximately $3.2 million in cash and 444,146 shares of LHI's
capital stock which is exchangeable for shares of the Company's common stock on
a one for one basis. The Company financed the cash portion of the consideration
through (i) a private placement of 350,000 shares of the Company's common stock
at a price of $3.50 per share; (ii) a loan in the amount of $750,000 from a bank
which is secured by a second mortgage interest in the Company's headquarters;
(iii) a loan of approximately $800,000 pursuant to a credit agreement with the
Toronto Dominion Bank and Lasiris; (iv) cash received of $950,000 pursuant to
the prepayment of a note receivable due to the Company.
Allocation of Purchase Price
The acquisition was accounted for as a purchase, and accordingly, the initial
purchase price and acquisition costs aggregating approximately $5.5 million has
preliminarily been allocated to the assets acquired, which consist of
approximately $4.0 million in identifiable assets, approximately $0.4 million in
goodwill, and approximately $1.1 million of in-process research and development
which was charged to operations in the second quarter of 1998. The purchase
price allocations represent the fair values determined by an independent
appraisal. The appraisal incorporated established valuation procedures and
techniques in determining the fair value of each asset. The amount allocated to
in-process research and development relates to projects that had not yet reached
technological feasibility and that, until completion of the development, have no
alternative future use. These projects will require substantial high risk
development and testing by the Company prior to reaching technological
feasibility.
The following outlines the allocation of purchase price for the acquisition of
Lasiris assuming the transaction took place on March 31, 1998:
<TABLE>
<S> <C>
Purchased in-process R&D $1,110,000
Developed Patented Technology 2,411,000
Trademarks/Tradenames 480,000
Assembled workforce 246,000
Goodwill and Deferred Taxes 1,703,000
---------
5,950,000
Net book value of assets acquired 853,000
---------
6,803,000
Less deferred taxes (1,255,000)
---------
5,548,000
=========
</TABLE>
Unaudited Pro Forma Combined Financial Statements
The following unaudited pro forma combined financial statements give effect to
the Acquisition. The pro forma combined balance sheet of the Company and Lasiris
as of March 31, 1998 assumes that the Acquisition took place on March 31, 1998.
The historical balance sheet of Lasiris as of March 31, 1998, has been converted
from Canadian dollars to US dollars using the exchange rate in effect on that
date. The pro forma statements of operations combine the historical statements
<PAGE>
of operations of Stocker & Yale and Lasiris for the year ended December 31,
1997, and the three months ended March 31, 1998. The historical statements of
operations of Lasiris included in the pro forma combined statements of
operations has been converted from Canadian dollars to US dollars using the
average exchange rate during the applicable period.
The pro forma combined statements of operations assume that the Acquisition took
place at the beginning of each respective period, including the related
amortization and interest expense adjustments. The pro forma statements of
operations do not include the nonrecurring charges for acquired in-process
research and development. The unaudited pro forma combined statements of
operations do not purport to be indicative of the results which would actually
have been reported if the Acquisition had been effected at those dates or which
may be reported in the future. These unaudited financial statements should be
read in conjunction with the accompanying notes and the respective historical
financial statements and related notes of Stocker & Yale on Form 10-K and
Lasiris included in this Form 8-K.
<PAGE>
Stocker & Yale, Inc.
Proforma Combined Balance Sheets
as of March 31, 1998
<TABLE>
<CAPTION>
Historical Pro-Forma
Stocker & Yale Lasiris Adjustments Combined
March 31, 1998
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents 149,094 - (36,000) 1 113,094
Accounts receivable, net of reserves 1,674,889 752,772 2,427,661
Inventories 5,106,831 616,837 5,723,668
Prepaid expenses 320,637 11,786 332,423
Research & development tax credits - 99,459 99,459
Prepaid taxes 735,328 - 735,328
Total Current Assets 7,986,779 1,480,854 9,431,633
Property and Equipment, Net 4,079,422 189,341 4,268,763
Other Intangible Assets 3,137,000 2 3,137,000
Goodwill 8,385,800 1,703,000 3 10,088,800
Note Receivable 1,000,000 (1,000,000) 4 -
Other Assets, Net of Amortization 83,484 6,224 89,708
------------------- --------------- ---------------- -----------------
21,535,485 1,676,419 3,804,000 27,015,904
=================== =============== ================ =================
LIABILITIES
Current Liabilities
Current portion of long term debt 418,033 60,063 750,000 5 1,228,096
Short term lease obligation 115,072 115,072
Accounts payable and accrued expenses 2,802,275 660,807 175,000 6 3,638,082
Total Current Liabilities 3,335,380 720,869 4,981,249
Long Term Debt and Capital Lease Obligations 5,820,516 61,688 799,000 7 6,681,204
Other Long Term Liabilities 564,688 564,688
Deferred Taxes 851,904 32,078 1,255,000 8 2,138,982
Deferred Grants - 8,844 8,844
14,374,967
STOCKHOLDERS INVESTMENT
Common Stock and PIC 10,835,394 192,387 2,664,553 9 13,692,334
Retained Earnings 127,603 660,552 (1,839,552) 10 (1,051,397)
TOTAL STOCKHOLDERS INVESTMENT 10,962,997 852,940 12,640,937
------------------- --------------- ---------------- -----------------
21,535,485 1,676,419 3,804,000 27,015,904
=================== =============== ================ =================
</TABLE>
<PAGE>
Notes to Pro Forma Combined Balance Sheets
as of March 31, 1998
1. The net adjustment to cash of ($36,000) reflects the sources and uses of
cash relating to the Acquisition.
<TABLE>
<S> <C> <C>
Sources $ 1,150,000 from a private placement of Stocker & Yale common
stock (see note 9)
731,000 from a short term loan from a bank (see note 6)
950,000 from the collection of a Note Receivable (see note 5)
799,000 from a revolving loan from a bank (see note 8)
-----------
$ 3,630,000
Uses $(3,209,000) paid to Lasiris shareholders
( 457,000) expenses related to the Acquisition
-----------
$(3,666,000)
Net cash $( 36,000)
</TABLE>
2. The adjustment to Other Intangible Assets of $3,137,000 records the
identifiable intangible assets acquired.
<TABLE>
<S> <C>
Developed Patented Technology $2,411,000
Trademarks/Tradenames 480,000
Assembled Workforce 246,000
----------
$3,137,000
</TABLE>
3. The adjustment to Goodwill consists of allocated purchase price of $448,000
plus deferred taxes on assets acquired of $1,255,000.
4. The adjustment to Note Receivable of ($1,000,000) reflects the payment of
this note.
5. The adjustment to Current Portion of Long Term Debt reflects a short term
note for $750,000. After payment of fees totaling $19,000, the Company
received net proceeds of $731,000 from this note.
6. The adjustment to Accrued Expenses of $175,000 represents the assumption of
certain additional liabilities of Lasiris pursuant to the acquisition.
7. The adjustment to Long Term Debt of $799,000 represents the proceeds of a
revolving loan from a bank to Lasiris.
8. The adjustment to Deferred Taxes of $1,255,000 is the tax effect of the
identified intangible assets acquired.
9. The adjustment to Capital Stock consists of the following: (i) the
elimination of Lasiris capital stock and paid in capital; (ii) $2,165,209
representing the fair value of 444,146 shares of the Company's common
stock, par value $0.001, issued to the shareholders of Lasiris; and (iii)
$1,124,716 representing the sale in a private placement of 350,000 shares
of the Company's common stock at a price of $3.50 per share, less offering
expenses of $100,284.
10. The adjustment to Retained Earnings consists of ($19,000) in costs
associated with the $750,000 short term loan, ($50,000) discount granted in
consideration of the prepayment of the $1,000,000 obligation to the
Company, the charge to expense of ($1,110,000) in acquired in-process
research and development costs, and the elimination of Lasiris retained
earnings.
<PAGE>
Stocker & Yale, Inc.
Pro Forma Combined Statements of Operations
For the Three Months Ended March 31, 1998
<TABLE>
<CAPTION>
---------- Historical ---------- Adjustments Combined
Stocker & Yale Lasiris
<S> <C> <C> <C> <C>
Net Sales 2,435,341 1,049,385 3,484,726
Cost of Sales 1,650,026 541,938 2,191,964
Gross Profit 785,315 507,447 1,292,762
Selling Expenses 346,512 141,273 487,785
General & Administrative Expenses 553,727 260,903 118,750 (1) 933,380
Research & Development Expenses 189,745 58,069 247,814
Operating Income/(Loss) (304,669) 47,202 (118,750) (376,217)
Interest Expenses 114,672 6,304 37,313 (2) 158,289
Income/(Loss) Before Taxes (419,341) 40,898 (156,063) (534,506)
Income Tax Expense/(Benefit) (140,000) 12,564 (45,750)(3) (173,186)
Net Income/(Loss) (279,341) 28,334 (110,313) (361,320)
</TABLE>
<PAGE>
Stocker & Yale, Inc.
Pro Forma Combined Statements of Operations
For the Twelve Months Ended December 31, 1997
<TABLE>
<CAPTION>
------------ Historical -------------
Year ended 11 months ended One Month
December 31, December 31, January Adjustments Combined
1997 1997 1997
Stocker & Yale Lasiris Lasiris
<S> <C> <C> <C> <C> <C>
Net Sales 11,162,026 3,801,752 345,614 15,309,392
Cost of Sales 6,898,970 2,152,128 195,648 9,246,746
Gross Profit 4,263,056 1,649,624 149,966 6,062,646
Selling & Administrative Expenses 4,181,040 893,403 81,218 475,000 (1) 5,630,661
Research & Development Expenses 725,539 167,108 15,192 907,838
Operating Income (643,523) 589,114 53,556 (475,000) (475,853)
Interest Expenses 388,337 6,812 619 149,250 (2) 545,018
Income Before Taxes (1,031,860) 582,302 52,937 (624,250) (1,020,872)
Income Tax Expense/Benefit (305,000) 172,558 15,687 (183,000)(3) (299,755)
Net Income (726,860) 409,744 37,249 (441,250) (721,117)
</TABLE>
<PAGE>
Notes to Pro Forma Combined Statements of Operations as of March 31, 1998 and as
of December 31, 1997
1. Reflects the increased depreciation and amortization relating to the
acquisition.
2. Reflects increased interest expenses relating to debt incurred as a result of
the acquisition.
3. Reflects adjusted tax provision of combined businesses, taking into account
that certain amortization and depreciation expenses are not deductible for
tax purposes.
