SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended June 30, 2001 Commission File Number 0-21068
SIGHT RESOURCE CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 04-3181524
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
100 Jeffrey Avenue
Holliston, MA 01746
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(Address of principal executive offices)
508-429-6916
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year, if changed since the last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No __________
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APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
On August 3, 2001, 28,345,114 shares (does not include 30,600 shares held as
treasury stock) of common stock, par value $0.01 per share, were outstanding.
1
SIGHT RESOURCE CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
PAGE
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ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of June 30, 2001 and
December 30, 2000 3
Consolidated Statements of Operations for the Three and Six
Months Ended June 30, 2001 and June 24, 2000 4
Consolidated Statements of Cash Flows for the Three and Six
Months Ended June 30, 2001 and June 24, 2000 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and 11
Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk 20
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 22
Signatures 23
Exhibit Index 24
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SIGHT RESOURCE CORPORATION
Consolidated Balance Sheets
(In thousands, except share and per share data)
June 30, 2001 December 30, 2000
------------- -------------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 201 $ 532
Accounts receivable, net of allowance
of $1,893 and $1,897, respectively 2,518 2,587
Inventories 5,416 5,977
Prepaid expenses and other current assets 659 457
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Total current assets 8,794 9,553
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Property and equipment 11,132 11,044
Less accumulated depreciation (7,891) (7,060)
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Net property and equipment 3,241 3,984
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Other assets:
Intangible assets, net 20,583 21,444
Other assets 87 158
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Total other assets 20,670 21,602
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$ 32,705 $ 35,139
============= ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolver notes payable $ 2,500 $ 2,500
Current portion of long term debt 6,796 6,540
Current portion of capital leases 8 10
Accounts payable 4,387 4,721
Accrued expenses 2,072 2,007
Dividends payable 308 51
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Total current liabilities 16,071 15,829
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Non-current liabilities:
Long term debt, less current maturities 259 451
Capital leases 22 25
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Total non-current liabilities 281 476
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Series B redeemable convertible preferred stock
1,452,119 shares issued 6,535 6,535
Stockholders' equity:
Preferred Stock, $.01 par value. Authorized 5,000,000
shares; no shares of Series A issued and outstanding --- ---
Common Stock, $.01 par value. Authorized 20,000,000
shares; 10,749,552 at June 30, 2001
and 9,261,552 at December 30, 2000 shares
issued and outstanding 107 93
Additional paid-in capital 38,217 38,452
Treasury stock at cost, 30,600 shares at June 30, 2001
and December 30, 2000 (137) (137)
Accumulated deficit (28,369) (26,109)
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Total stockholders' equity 9,818 12,299
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$ 32,705 $ 35,139
============= ===================
See accompanying notes to consolidated financial statements.
3
SIGHT RESOURCE CORPORATION
Consolidated Statements of Operations
(In thousands, except share and per share data)
Three Months Ended Six Months Ended
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June 30, June 24, June 30, June 24,
2001 2000 2001 2000
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(Unaudited) (Unaudited)
Net revenue $ 14,505 $ 16,483 $ 30,564 $ 34,002
Cost of revenue 4,822 5,120 9,740 10,522
---------------- ------------------ ------------------ ------------------
Gross profit 9,683 11,363 20,824 23,480
Selling, general and
administrative expenses 11,399 11,697 22,588 23,845
---------------- ------------------ ------------------ ------------------
Loss from operations (1,716) (334) (1,764) (365)
---------------- ------------------ ------------------ ------------------
Other income (expense)
Interest income 4 17 11 29
Interest expense (197) (296) (440) (519)
Loss on disposal of assets (22) --- (22) (20)
Write off of deferred
financing costs --- (60) --- (60)
---------------- ------------------ ------------------ ------------------
Total other income (expense) (215) (339) (451) (570)
---------------- ------------------ ------------------ ------------------
Loss before income tax expense (1,931) (673) (2,215) (935)
Income tax expense 24 22 45 47
---------------- ------------------ ------------------ ------------------
Net loss $ (1,955) $ (695) $ (2,260) $ (982)
================ ================== ================== ==================
Dividends on redeemable convertible
preferred stock 129 --- 257 ---
---------------- ------------------ ------------------ ------------------
Net loss attributable to common
stock shareholders $ (2,084) $ (695) $ (2,517) $ (982)
================ ================== ================== ==================
Basic and diluted loss per
common share $ (0.21) $ (0.08) $ (0.26) $ (0.11)
================ ================== ================== ==================
Weighted average number of
common shares outstanding: 9,991,000 9,226,000 9,625,000 9,226,000
================ ================== ================== ==================
See accompanying notes to consolidated financial statements.
4
SIGHT RESOURCE CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
Six Months Ended
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June 30, June 24,
2001 2000
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(unaudited)
Operating activities:
Net loss $(2,260) $ (982)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 1,820 1,980
Amortization and write-off of deferred financing costs 100 135
Amortization of unearned compensation --- 2
Loss on disposal of assets 22 20
Changes in operating assets and liabilities:
Accounts receivable 69 106
Inventories 561 (287)
Prepaid expenses and other current assets (202) (18)
Accounts payable and accrued expenses (269) (404)
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Net cash provided by (used in) operating activities (159) 552
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Investing activities:
Purchases of property and equipment (240) (420)
Proceeds from sale of assets --- 160
Other assets (5) (152)
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Net cash used in investing activities (245) (412)
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Financing activities:
Principal payments (17) (1,041)
Proceeds from notes 76 800
Proceeds from issuance of stock 14 ---
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Net cash provided by (used in) financing activities 73 (241)
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Net decrease in cash and cash equivalents (331) (101)
Cash and cash equivalents, beginning of period 532 166
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Cash and cash equivalents, end of period $ 201 $ 65
============ =============
Supplementary cash flow information:
Interest paid $ 441 $ 414
============ =============
Income taxes paid 55 58
============ =============
See accompanying notes to consolidated financial statements.
5
SIGHT RESOURCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(1) THE COMPANY
(a) Nature of Business
Sight Resource Corporation (the "Company") manufactures, distributes and
sells eyewear and related products and services.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared by
the Company without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of the Company, these
consolidated financial statements contain all adjustments (consisting of
only normal, recurring adjustments) necessary to present fairly the
financial position of Sight Resource Corporation as of June 30, 2001 and
the results of its operations and cash flows for the periods presented.
The Company's fiscal year ends on the last Saturday in December. Each
quarter represents a thirteen week period, except during a 53-week year in
which case one quarter represents a fourteen week period. The quarters
ended June 30, 2001 and June 24, 2000 were thirteen week periods; the six
months ended June 30, 2001 and June 24, 2000 were 26-week periods. Fiscal
year 2001 is a 52-week fiscal year and 2000 was a 53-week fiscal year.
The accompanying consolidated financial statements and related notes should
be read in conjunction with the audited consolidated financial statements
which are contained in the Company's Annual Report on Form 10-K, as amended
on Form 10-K/A, for the year ended December 30, 2000.
(3) EARNINGS PER SHARE
The following table provides a reconciliation of the numerators
and denominators of the basic and diluted loss per share computations for
the three months and six months ended June 30, 2001 and June 24, 2000:
6
SIGHT RESOURCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Three Months Ended Six Months Ended
June 30, June 24, June 30, June 24,
2001 2000 2001 2000
----------- ----------- ----------- -----------
BASIC AND DILUTED LOSS PER SHARE
Net loss $ (1,955) $ (695) $ (2,260) $ (982)
----------- ----------- ----------- -----------
Net loss attributable to common shareholders (2,084) (695) (2,517) (982)
=========== =========== =========== ===========
Weighted average common shares outstanding 9,991,000 9,226,000 9,625,000 9,226,000
Net loss per share $ (0.21) $ (0.08) $ (0.26) $ (0.11)
=========== =========== =========== ===========
Outstanding options, warrants and convertible preferred stock were not
included in the computation of diluted earnings per share for the three and six
months ended June 30, 2001, because they would have been antidilutive. The
following table presents the number of outstanding options, warrants and
convertible preferred stock shares not included in the computation of diluted
loss per share.
Three Months Ended Six Months Ended
June 30, June 24, June 30, June 24,
2001 2000 2001 2000
--------------- -------------- -------------- ---------------
Options 0 7,135 0 6,017
Warrants 5,463 1,420 5,108 1,197
Convertible preferred shares 1,452,119 1,452,119 1,452,119 1,452,119
--------------- -------------- -------------- ---------------
Total 1,457,582 1,460,674 1,457,227 1,459,333
=============== ============== ============== ===============
7
SIGHT RESOURCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(In thousands, except share and per share data)
(4) Operating Segment and Related Information
The following tables represent certain operating segment information.
For the three months ended June 30, 2001 and June 24, 2000.
Totals Eye Care Centers Laser Vision Correction All Other Consolidated Totals
---------------- ----------------------- --------- -------------------
2001 2000 2001 2000 2001 2000 2001 2000
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Revenues:
External $14,421 $16,279 $ 84 $ 204 $ 0 $ 0 $14,505 $16,483
customers
Interest:
Interest income 0 0 0 0 4 17 4 17
Interest expense (5) (9) 0 0 (192) (347) (197) (356)
------- ------- ----- ----- ------- ------- ------- -------
Net interest (5) (9) 0 0 (188) 330 (193) 339
expense
Depreciation and 859 974 0 1 46 50 905 1,025
amortization
Income (loss) (452) 752 10 50 (1,274) (1,136) (1,716) (334)
from operations
Identifiable assets 31,890 29,333 26 15 787 9,840 32,703 39,188
Capital 102 143 0 0 14 30 116 173
expenditures
For the six months ended June 30, 2001 and June 24, 2000.
Totals Eye Care Centers Laser Vision Correction All Other Consolidated Totals
---------------- ----------------------- --------- -------------------
2001 2000 2001 2000 2001 2000 2001 2000
------------------------------------------------------------------------------------------------------------
Revenues:
External $30,389 $33,628 $ 175 $ 374 $ 0 $ 0 $30,564 $34,002
customers
Interest:
Interest income 0 0 0 0 11 29 11 29
Interest expense (7) (14) 0 0 (433) (565) (440) (579)
------- ------- ----- ----- ------- ------- ------- -------
Net interest (7) (14) 0 0 (422) 536 (429) (550)
expense
Depreciation and 1,728 1,882 1 4 91 94 1,820 1980
amortization
Income (loss) 467 1,865 25 50 (2,256) (2,280) (1,764) (365)
from operations
Identifiable assets 31,890 29,333 26 15 787 9,840 32,703 39,188
Capital 191 374 0 2 49 44 240 420
expenditures
Each operating segment is individually managed and has separate financial
results that are reviewed by the Company's chief operating decision-makers.
Each segment contains closely related products that are unique to the particular
segment.
8
The principal products of the Company's eye care centers are eyeglasses, frames,
ophthalmic lenses and contact lenses.
Profit from operations is net sales less cost of sales and selling, general and
administrative expenses, but is not affected by non-operating charges/income or
by income taxes.
Non-operating charges/income consists principally of net interest expense.
In calculating profit from operations for individual operating segments, certain
administrative expenses incurred at the operating level that are common to more
than one segment are not allocated on a net sales basis.
All intercompany transactions have been eliminated, and intersegment revenues
are not significant.
(5) SUBSEQUENT EVENT
On May 23, 2001, the Company entered into a common stock purchase agreement by
and among the Company, eyeshop.com inc. ("Eyeshop") and certain investors
associated with Eyeshop (the "Stock Purchase Agreement"), pursuant to which the
Company agreed to sell, in two tranches, an aggregate of 5,000,000 shares of its
common stock at a price of $0.20 per share for an aggregate purchase price of
$1,000,000, to persons associated with Eyeshop. The Company closed on the sale
of the first tranche of 1,250,000 shares for $250,000 on May 23, 2001. The
second tranche of 3,750,000 shares for $750,000 closed on July 20, 2001.
On July 20, 2001, pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") dated as of May 23, 2001 by and among the Company, Eyeshop
Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of
the Company ("EAC"), and Eyeshop, EAC merged with and into Eyeshop (the
"Merger") and Eyeshop became a wholly owned subsidiary of the Company.
Pursuant to the Merger Agreement, Eyeshop stockholders exchanged their Eyeshop
stock for the following at the closing of the merger:
. Each outstanding share of Eyeshop common stock was exchanged for 4.52 shares
of the Company's common stock;
. Each outstanding share of Eyeshop Series A Preferred Stock was exchanged for
9.79 shares of the Company's common stock; and
. Each outstanding share of Eyeshop Series B Preferred Stock was exchanged for
33.72 shares of the Company's common stock.
Pursuant to the Merger Agreement, former Eyeshop stockholders are also entitled
to receive additional shares of the Company's common stock if and when the
options, warrants and other rights to receive the Company's common stock that
were held by the Company's securityholders as of May 23, 2001 are exercised.
The Company issued a total of 7,306,662 shares of Common Stock to former
Eyeshop stockholders in connection with the Merger. At the close of the Merger,
former Eyeshop stockholders and purchasers of the Company's common stock
pursuant to the Stock Purchase Agreement held approximately 50% of the issued
and outstanding common stock of the Company.
The Merger will be accounted for using the purchase method of accounting. In
conjunction with the Merger, the Company has announced plans to relocate
headquarters from Holliston, Massachusetts to Cincinnati, Ohio. Although plans
have not been finalized, as a result of the planned relocation, the Company
expects to incur costs for employee severance, costs to relocate the current
headquarters, costs for new systems development or acquisition, additional lease
costs and a loss on disposal of assets.
9
On May 31, 2001, the Company entered into a common stock purchase agreement by
and among the Company and certain investors associated with Eyeshop (the "Second
Stock Purchase Agreement"), to sell an aggregate of 6,569,500 shares of its
common stock at a price of $0.20 per share for an aggregate purchase price of
$1,313,900. The Company closed on the sale of the 6,569,500 shares on July 20,
2001.
Collectively, the former stockholders of Eyeshop together with the common stock
purchasers associated with Eyeshop held approximately 18,876,162 shares of the
Company's common stock immediately after the merger and the second common stock
financing.
The Company is currently assessing the accounting for the merger transaction to
determine the acquirer under the recently issued Statement of Financial
Accounting Standards No. 141 Business Combinations.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995: Statements contained in this document which are not historical fact are
forward-looking statements based upon management's current expectations and are
subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in or implied by such forward-looking
statements. These risks include, but are not limited to, the risks described
under "Business Risks and Cautionary Statements" in the Company's Form 10-K, as
amended on Form 10-K/A, for the fiscal year ended December 30, 2000, filed with
the Securities and Exchange Commission.
OVERVIEW
Sight Resource Corporation (the "Company") manufactures, distributes and
sells eyewear and related products and services. As of June 30, 2001, the
Company's operations consisted of 119 eye care centers with two regional optical
laboratories and three distribution centers. Based upon annual sales, the
Company is one of the fifteen largest providers in the United States' primary
eye care industry. The Company's eye care centers operate primarily under the
brand names Cambridge Eye Doctors, E.B. Brown Opticians, Eyeglass Emporium, Kent
Optical, Shawnee Optical, Vision Plaza, and Vision World. The Company also
provides, or where necessary to comply with applicable law, administers the
business functions of optometrists, ophthalmologists and professional
corporations that provide vision related professional services.
The Company operates two regional optical laboratories and three
distribution centers. The regional optical laboratories provide complete
laboratory services to the Company's eye care centers, including polishing,
cutting and edging, tempering, tinting and coating of ophthalmic lenses. The
distribution centers provide and maintain an inventory of all accessories and
supplies necessary to operate the primary eye care centers in their regions, as
well as "ready made" eye care products, including contact lenses and related
supplies. The inventory of eyeglass lenses, frames, contact lenses, accessories
and supplies is acquired through a number of sources, domestic and foreign.
Management believes that the regional optical laboratories and distribution
centers have the capacity to accommodate additional multi-site eye care centers.
RESULTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2001 AND JUNE 24, 2000
Net Revenue. During the three months ended June 30, 2001, the Company generated
net revenue of approximately $14.4 and $0.1 million from the operation of its
119 eye care centers and its affiliated laser vision correction services,
respectively, as compared to net revenue of approximately $16.3 and $0.2 million
from its 128 eye care centers and its affiliated laser vision correction
services, respectively, for the three months ended June 24, 2000. Net revenue
for the first six months of fiscal 2001 was approximately $30.4 million and $0.2
million from the operations of its eye care centers and laser vision correction
affiliation, respectively, as compared to net revenue of approximately $33.6
million and $0.4 million from its eye care centers and its affiliated laser
vision correction services for the first six months ended June 24, 2000. The
$2.0 million, or 12.0% decrease in total net revenue for the three months ended
June 30, 2001 relates to lower average net sales per store, the closing of nine
stores net of store additions and the reduction of sales to the Company's
largest managed care plan customer in New England. The $3.4 million or 10.1%
decrease in total net revenue for the first six months ended June 30, 2001
11
relates to lower average net sales per store, the closing of nine stores net of
store additions and the reduction of sales to the Company's largest managed care
plan customer in New England.
COST OF REVENUE. Cost of revenue decreased from approximately $4.9 million and
$0.2 million from the operation of the 128 eye care centers and laser vision
correction affiliation, respectively, for the three months ended June 24, 2000
to approximately $4.7 million and $0.1 million from the operation of the 119 eye
care centers and the Company's laser vision correction affiliation,
respectively, for the three months ended June 30, 2001. Total cost of revenue
as a percentage of net revenue increased from 31.1% for the three months ended
June 24, 2000 to 33.2% for the three months ended June 30, 2001. Cost of
revenue decreased from approximately $10.2 million from the operation of the eye
care centers for the six months ended June 24, 2000 to approximately $9.5
million for the six months ended June 30, 2001. Cost of revenue decreased from
approximately $0.3 million from the operation of the Company's laser vision
correction affiliation for the six months ended June 24, 2000 to approximately
$0.2 million from its laser vision correction affiliation for the six months
ended June 30, 2001. Cost of revenue as a percentage of net revenue increased
from 30.9% for the six months ended June 24, 2000 to 31.9% for the six months
ended June 30, 2001. The increase as a percentage of net revenue primarily
reflects more sales price discounting, offset somewhat by the consolidation of
optical laboratory operations. Cost of revenue principally consisted of (i) the
cost of manufacturing, purchasing and distributing optical products to customers
of the Company and (ii) the cost of delivering LVC services.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were approximately $11.4 million and $22.6 million for
the three months and six months ended June 30, 2001 as compared to approximately
$11.7 million and $23.8 million for the three and six months ended June 24,
2000. The decrease primarily relates to reductions in bad debt expense, lower
store operating costs due to the closure of nine stores net of store additions,
offset somewhat by inflationary pressures that increased payroll costs.
Selling, general and administrative expense, as a percentage of net revenue,
increased from 71.0% to 78.6% for the three months ended June 30, 2001, and
increased from 70.1% to 73.9% for the six months ended June 30, 2001 as compared
to the three and six months ended June 24, 2000.
OTHER INCOME AND EXPENSE. Interest income totaled $4,000 and $11,000 for the
three months and six months ended June 30, 2001, respectively, as compared to
$17,000 and $29,000 for the three and six months ended June 24, 2000,
respectively. This decrease resulted primarily from the investment of a lower
average cash and cash equivalents balance during the first and second quarters
of 2001 as compared to the same period in 2000. Interest expense totaled
$197,000 and $440,000 for the three and six months ended June 30, 2001,
respectively, as compared to $296,000 and $519,000 for the three and six months
ended June 24, 2000, respectively. The decrease resulted from lower interest
rates offset somewhat by higher average balance of debt outstanding during the
first and second quarters of 2001 as compared to the same periods in 2000. Net
loss on disposition of assets totaled $22,000 for both the three and six months
ended June 30, 2001, respectively, as compared to $0 and $20,000 for the three
and six months ended June 24, 2000, respectively. The non-cash write-off of
deferred financing costs for the three months ended June 24, 2000 of
approximately $60,000, as required by generally accepted accounting principles,
was related to the execution of a loan modification agreement with Fleet Bank
dated March 31, 2000.
12
NET LOSS. The Company realized a net loss of $2,084,000, or $(0.21) per share
on a basic and diluted weighted average basis, for the three months ended June
30, 2001 as compared to net loss of $695,000, or $(0.08) per share on a basic
and diluted basis, for the three months ended June 24, 2000. The Company
realized a net loss of $2,517,000 or $(0.26) per share basic and diluted for the
six months ended June 30, 2001, as compared to a net loss of $982,000 or ($0.11)
per share on a basic and diluted basis for the six months ended June 24, 2000.
Liquidity and Capital Resources
At June 30, 2001, the Company had approximately $0.2 million in cash and
cash equivalents and working capital deficit of approximately $7.3 million, in
comparison to approximately $0.5 million in cash and cash equivalents and
working capital deficit of approximately $5.7 million as of December 30, 2000.
The working capital deficit is primarily due to the bank debt of $5.9 million
with Sovereign Bank of New England ("Sovereign") which was classified on June
30, 2001 and on December 30, 2000 as current. The maturity date of the bank
debt has been extended to December 31, 2002. The bank debt continues to be
classified as current because the Company cannot forecast with reasonable
certainty that the Company will be in compliance with future bank covenants.
Sovereign transferred the Company's debt back to Fleet National Bank in July
2001.
The Company may need to raise additional funds in the near term and may
seek to raise those funds through additional financings, including public or
private equity offerings. There can be no assurance that funds will be
available for the contemplated financings or otherwise on terms acceptable to
the Company, if at all. If adequate funds are not available, the Company may be
required to limit its operations, which would have a material and adverse affect
on the Company.
Effective January 1, 1999, the Company acquired all of the outstanding
shares of capital stock of Shawnee Optical, Inc. ("Shawnee"). The purchase
price paid in connection with this acquisition was $1.75 million in cash, $0.3
million in notes payable over three years and 70,000 shares of common stock. In
addition, the Company agreed to issue additional consideration to the Shawnee
stockholders if the market price of the Company's Common Stock did not equal or
exceed $5.00 per share at any time during the period from January 22, 2000 to
January 22, 2001. The market price of the Company's Common Stock did not equal
or exceed $5.00 during such period. The amount of additional consideration due
to the Shawnee stockholders for each share of common stock issued in the
acquisition and held by them on January 22, 2001 is equal to the difference
between $5.00 and the greater of (a) the market price on January 22, 2001 or (b)
$2.45. As of January 22, 2001, the aggregate additional consideration payable
to the Shawnee sellers was $178,500. As a result of the Company's obligation to
issue additional consideration to the Shawnee stockholders, the Company entered
into a Settlement Agreement and Mutual Release, dated March 20, 2001, with the
Shawnee stockholders in which the Company agreed to issue 238,000 shares of its
common stock to the Shawnee stockholders. At the time of the acquisition, the
Company included the value of this additional consideration in its determination
of the purchase price. In addition, the Company has failed to make required
note payments to Shawnee noteholders in the amount of $100,000 that were due on
January 22, 2001.
Effective April 1, 1999, the Company acquired all of the outstanding shares
of capital stock of Kent Optical Company and its associated companies
(collectively, "Kent"). The purchase price paid in connection with this
acquisition was $5.209 million in cash, $1.0 million in notes payable over three
years and 160,000 shares of common stock. In addition, the Company offered to
issue additional consideration to the Kent stockholders if the market price of
the Company's common stock did not equal or exceed $5.00 per share at any time
during the period from April 23, 2000 to April 23, 2001. The market price of
the Company's common stock did not equal or exceed $5.00 per share at any time
during the period from April 23, 2000 to April 23, 2001. The amount of
additional consideration due to the Kent stockholders for each share of common
stock issued in the acquisition and held by them on April 23, 2001 is equal to
the difference between $5.00 and the greater of (a) the market price of the
13
common stock on April 23, 2001 or (b) $2.73. As of April 23, 2001, the aggregate
additional consideration payable to the Kent sellers was $363,200 (the
"Additional Consideration"). At the Company's option, the Additional
Consideration may be paid to the Kent stockholders in cash or in additional
shares of the Company's common stock valued at its market price on the date that
the Additional Consideration becomes payable to the Kent stockholders. At the
time of the acquisition, the Company included the value of the Additional
Consideration in its determination of the purchase price. In addition, the
Company has failed to make required note payments to Kent noteholders in the
amount of $333,333 that were due on April 23, 2001. On July 27, 2001, the
Company was served with a complaint filed by John Cress and Timothy Westra
(together, the "Plaintiffs") in Muskegon County Circuit Court in Michigan on
July 6, 2001 against the Company and Kent Acquisition Corporation (a subsidiary
of the Company, "Kent Acquisition") alleging payment defaults under certain
promissory notes (the "Kent Notes") issued to the Plaintiffs as part of
consideration pursuant to a Stock Purchase Agreement, dated April 1, 1999 by and
among Kent Acquisition, Kent Optical Company and its related entities (the "Kent
Stock Purchase Agreement"), and the failure to make payments of the Additional
Consideration. Plaintiffs seek relief in the form of payment of amounts owed
pursuant to the Kent Notes and payment of the Additional Consideration owed
pursuant to the Kent Stock Purchase Agreement, including all applicable
interest, costs and attorney fees. The outcome of this matter is uncertain and
the Company and its legal advisors are in discussions with the Plaintiffs and
their legal advisors regarding the complaint.
In connection with the exercise of stock options to purchase 138,322 shares
(the "Option Shares") of the Company's common stock during fiscal 1997, Stephen
M. Blinn, a former executive officer and former Director of the Company,
executed a promissory note (the "Note") in favor of the Company for the
aggregate exercise price of $594,111. The Note is due on the earlier of
September 2, 2007 or the date upon which Mr. Blinn receives the proceeds of the
sale of not less than 20,000 of the Option Shares (the "Maturity Date").
Interest accrues at the rate of 6.55%, compounding annually, and is payable on
the earlier of the Maturity Date of the Note or upon certain Events of Default
as defined in the Note. The principal balance of the Note, together with
accrued and unpaid interest, was approximately $714,000 as of March 31, 2001.
During the third quarter of fiscal 2000, Mr. Blinn informed the Company that
he understood that the terms of the Note permitted Mr. Blinn to satisfy in full
his obligations under the Note by either (a) returning the Option Shares to the
Company or (b) turning over to the Company any cash proceeds received by Mr.
Blinn upon a sale of the Option Shares. The Company has informed Mr. Blinn that
the Note is a full recourse promissory note, and that Mr. Blinn remains
personally liable for all unpaid principal and interest under the Note. Due to
Mr. Blinn's position regarding the Note and his failure to provide the Company
or the Company's accountants with a copy of his personal financial statements or
any other evidence of his ability to pay the amounts due under the Note, the
Company has established a $714,000 reserve for notes receivable and, subsequent
to the establishment of the reserve, the Company no longer recognizes as
interest income accrued interest related to the Note.
As of June 30, 2001, the Company had warrants outstanding which provide it
with potential sources of financing as outlined below. However, because of the
current market value of the Company's common stock, it is unlikely that any
subsequent material proceeds may be realized by the Company.
Number Potential
Securities Outstanding Proceeds
----------------------------------------------------------------------------
Class II Warrants 290,424 $2,613,816
Bank Austria AG, f/k/a Creditanstalt, Warrants 150,000 693,750
Sovereign Warrants 50,000 25,500
Sovereign Warrants 50,000 7,810
----------
$3,340,876
==========
As of June 30, 2001, the Company also has outstanding 227,125 Class I
Warrants. The Class I Warrants entitle the holder to purchase an amount of
shares of the Company's common stock equal to an aggregate of up to 19.9% of the
shares of common stock purchasable under the Company's outstanding warrants and
options on the same terms and conditions of existing warrant and option holders.
The purchaser is obligated to exercise these warrants at the same time the
options and warrants of existing holders are exercised, subject to certain
limitations. The amount of proceeds from the exercise of these
14
warrants cannot be estimated at this time; however, for reasons stated above it
is unlikely that any proceeds would be realized by the Company.
On February 20, 1997, the Company entered into a Credit Agreement (the
"1997 Agreement") with a bank pursuant to which the Company could borrow up to
$5.0 million on a term loan basis and up to $5.0 million on a revolving credit
basis, subject to certain performance criteria. As part of the 1997 Agreement,
the Company issued to the bank warrants to purchase 150,000 shares of the common
stock at a purchase price of $4.625 per share. The warrants expire December 31,
2003. As noted in the next paragraph below, the Company has entered into a new
credit facility and retired the 1997 Agreement.
On April 15, 1999, the Company entered into a Credit Agreement (the "1999
Agreement") with Fleet National Bank ("Fleet") pursuant to which the Company
could borrow $10.0 million on an acquisition line of credit, of which $7.0
million is on a term loan basis and $3.0 million is on a revolving line of
credit basis, subject to certain performance criteria and an asset-related
borrowing base for the revolver. The performance criteria include, among others,
financial condition covenants such as net worth requirements, indebtedness to
net worth ratios, debt service coverage ratios, funded debt coverage ratios, and
pretax profit, net profit and EBITDA requirements. The acquisition line
facility bore interest at either Fleet's prime rate, or LIBOR plus 2.25%, or at
a comparable interest swap rate at the Company's election. The term loan
facility bore interest at LIBOR plus 2.25% or at a comparable interest swap rate
at the Company's election. The revolving credit facility bore interest at
Fleet's prime rate or LIBOR plus 2.0% at the Company's election.
At December 25, 1999, the Company was not in compliance with the following
financial covenants of the 1999 Agreement: minimum net worth, minimum debt
service coverage, maximum funded debt service coverage and minimum net profit.
However, on March 31, 2000, the Company and Fleet entered into a modification
agreement (the "Original Modification Agreement") that amended the 1999
Agreement in order to, among other things, waive the Company's default, adjust
certain covenants to which the Company is subject and terminate the acquisition
line of credit. In addition, the Original Modification Agreement limited the
revolving line note to $2.5 million and the term loan to $6.75 million and
established the maturity date for each of these credit lines as March 31, 2001.
Also, the Original Modification Agreement established the following interest
rates for both the revolving line note and term loan: (i) from March 31, 2000
through August 31, 2000 - prime rate plus 1.0%; (ii) from September 1, 2000
through October 31, 2000 - prime rate plus 2.0%; and (iii) from November 1, 2000
through March 31, 2001 - prime rate plus 3.0%. The scheduled monthly principal
payments for the term loan were adjusted to $83,333.33 from April 2000 through
July 2000, $100,000.00 from August 2000 through December 2000 and $125,000.00
from January 2001 through March 2001. As part of the Original Modification
Agreement, the Company issued to Fleet warrants to purchase 50,000 shares of the
Company's common stock at an exercise price of $0.51 per share which was equal
to the average closing price of the common stock for the last five trading days
for the month of August 2000, and warrants to purchase 50,000 shares of the
Company's common stock at an exercise price of $0.156 per share which was equal
to the average closing price of the Company's common stock for the last five
trading days for the month of December 2000. In August 2000, as a result of a
bank merger, Sovereign became the successor party to Fleet in the Original
Modification Agreement.
On November 30, 2000, the Company and Sovereign entered into a second
modification agreement (the "Second Modification Agreement") that amended the
terms of the Original Modification Agreement in order to, among other things,
defer certain payments required under the term note and amend certain terms and
conditions of the 1999 Agreement. Sovereign deferred the required principal
payments due on December 1, 2000 in the amount of $100,000 and on January 1,
2001 in the amount of $125,000 until March 1, 2001 and March 22, 2001,
respectively. At December 30, 2000, the Company was in default for non-
compliance with certain negative covenants contained in the Second Modification
Agreement relating to minimum net worth, minimum debt service coverage, maximum
funded debt service coverage and minimum net profit.
15
On March 26, 2001, the Company and Sovereign entered into the Third
Modification Agreement (the "Third Modification Agreement") that amended the
terms of the Original Modification Agreement and the Second Modification
Agreement in order to, among other things, waive the Company's default, adjust
or delete certain covenants to which the Company was subject, change the
repayment terms and extend the maturity date of the loans to December 31, 2002.
In addition, the Third Modification Agreement required that the Company close an
equity financing of at least $1.0 million with third party investors on or
before May 31, 2001. The Third Modification Agreement establishes the following
annual interest rates for both the revolving line and term loans: (i) from
February 1, 2001 through September 30, 2001 - 6%; (ii) from October 1, 2001
through December 31, 2001 - 7%; (iii) from January 1, 2002 through December 31,
2002 - prime rate subject to a minimum rate of 8% and a maximum rate of 11%.
The scheduled monthly principal payments do not begin until July 1, 2001 and are
$30,000 from July 1, 2001 through December 31, 2001, and $100,000 from January
1, 2002 through December 31, 2002. As of June 30, 2001, $5.9 million was
borrowed on the term loan and $2.5 million was borrowed on the revolving credit
facility.
On May 14, 2001, the Company and Sovereign amended and restated the Third
Modification Agreement (the "Amended and Restated Third Modification
Agreement"). The Amended and Restated Third Modification Agreement contains the
same terms as the Third Modification Agreement, except that the Amended and
Restated Third Modification Agreement requires the Company to close a financing
or series of financings, either through the issuance of equity or debt
subordinate to Sovereign, of at least $2.3 million with third party investors on
or before July 15, 2001.
On May 23, 2001, the Company entered into a common stock purchase agreement
by and among the Company, eyeshop.com inc. ("Eyeshop") and certain investors
associated with Eyeshop (the "Stock Purchase Agreement"), pursuant to which the
Company agreed to sell, in two tranches, an aggregate of 5,000,000 shares of its
common stock at a price of $0.20 per share for an aggregate purchase price of
$1,000,000, to persons associated with Eyeshop. The Company closed on the sale
of the first tranche of 1,250,000 shares for $250,000 on May 23, 2001. The
second tranche of 3,750,000 shares for $750,000 closed on July 20, 2001.
On July 20, 2001, pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") dated as of May 23, 2001 by and among the Company, Eyeshop
Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of
the Company ("EAC"), and Eyeshop, EAC merged with and into Eyeshop (the
"Merger") and Eyeshop became a wholly owned subsidiary of the Company.
Pursuant to the Merger Agreement, Eyeshop stockholders exchanged their Eyeshop
stock for the following at the closing of the merger:
. Each outstanding share of Eyeshop common stock was exchanged for 4.52 shares
of the Company's common stock;
. Each outstanding share of Eyeshop Series A Preferred Stock was exchanged for
9.79 shares of the Company's common stock; and
. Each outstanding share of Eyeshop Series B Preferred Stock was exchanged for
33.72 shares of the Company's common stock.
Pursuant to the Merger Agreement, former Eyeshop stockholders are also
entitled to receive additional shares of the Company's common stock if and when
the options, warrants and other rights to receive the Company's common stock
that were held by the Company's securityholders as of May 23, 2001 are
exercised. The Company issued a total of 7,306,662 shares of Common Stock to
former Eyeshop stockholders in connection with the Merger.
The Merger will be accounted for using the purchase method of accounting.
In conjunction with the Merger, the Company has announced plans to relocate
headquarters from Holliston, Massachusetts to Cincinnati, Ohio. Although plans
have not been finalized, as a result of the planned relocation, the
16
Company expects to incur costs for employee severance, costs to relocate the
current headquarters, costs for new systems development or acquisition,
additional lease costs and a loss on disposal of assets.
On May 31, 2001, the Company entered into a common stock purchase agreement
by and among the Company and certain investors associated with Eyeshop (the
"Second Stock Purchase Agreement"), to sell an aggregate of 6,569,500 shares of
its common stock at a price of $0.20 per share for an aggregate purchase price
of $1,313,900. The Company closed on the sale of the 6,569,500 shares on July
20, 2001.
Contemporaneously, with the closing of the Merger, the Company and Carlyle
Venture Partners, L.P., c/s Venture Investors, L.P., Carlyle U.S. Venture
Partners, L.P. and Carlyle Venture Coinvestment, L.L.C. (collectively, the
"Purchasers") entered into an agreement which provides for, among other things,
the following terms: that upon conversion of the Preferred Stock, the Purchasers
will be entitled to receive 3,176,511 shares of the Company Common Stock in
satisfaction of the Purchaser's rights to receive anti-dilution protection in
connection with the transactions contemplated by the financing and merger; that
the Purchasers (i) waive their rights to anti-dilution protection with respect
to future obligations of the Company to issue securities and (ii) waive their
rights to receive additional shares of Company Common Stock pursuant to the
Class I Warrants with respect to future issuances of warrants and options by the
Company, all in exchange for a warrant to purchase 1,000,000 shares of Company
Common Stock at an exercise price of $0.20; that the Company satisfy its
obligations to pay dividends on the Preferred Stock for the calendar year 2001
by issuing an aggregate of 1,221,999 shares of Company Common Stock in
installments of 364,723 shares, 318,947 shares, 283,380 shares and 254,949
shares payable on the first day of February, May, August and November of 2001,
respectively; that dividends accruing on the Preferred Stock after November 1,
2001 will accrue as cash dividends and be paid promptly in cash upon the
earliest to occur of (i) the merger, consolidation, reorganization,
recapitalization, dissolution or liquidation of the Company where the
stockholders of the Company immediately following the consummation of the merger
no longer own more than 50% of the voting securities of the Company, (ii) the
sale, lease, exchange or other transfer of all or substantially all of the
assets of the Company, (iii) the consummation of an equity financing by the
Company in which proceeds to the Company, net of transaction costs, are greater
than or equal to ten million dollars, (iv) the end of the first twelve month
period in which earnings before income taxes, depreciation and amortization are
equal to or greater than five million dollars or (v) the refinancing of the
Company's outstanding indebtedness to Sovereign Bank; and that the Purchasers
waive their right to more than one designee on the board of directors.
The Company has an acquisition strategy to acquire and integrate the assets
of multi-site eye care centers and the practices of eye care professionals and
to employ or enter into management services contracts with these professionals.
This strategy includes both expanding existing regional markets and entering new
regional markets. The Company will also target acquisitions in strategic
markets that will serve as platforms from which the Company can consolidate a
given service area by making and integrating additional "in-market"
acquisitions. The Company from time to time will evaluate potential acquisition
candidates. Without additional funding, the Company's rate of acquisition and
size of acquisition will be limited.
RECENT ACCOUNTING PRONOUNCEMENTS
17
In July, 2001, the FASB issued Statement No. 141, Business Combinations,
and Statement No. 142, Goodwill and Other Intangible Assets. Statement 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 as well as all purchase method
business combinations completed after June 30, 2001. Statement 141 also
specifies the criteria intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill, noting
that any purchase price allocable to an assembled workforce may not be accounted
for separately. Statement 142 will require that goodwill and intangible assets
with indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with the provisions of Statement 142.
Statement 142 will also require that intangible assets with definite useful
lives be amortized over their respective estimated useful lives to their
estimated residual values, and reviewed for impairment in accordance with SFAS
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of.
The Company is required to adopt the provisions of Statement 141
immediately, except with regard to business combinations initiated prior to July
1, 2001, which it expects to account for using the pooling-of-interests method,
and Statement 142 effective January 1, 2002. Furthermore, any goodwill and any
intangible assets determined to have an indefinite useful life that are acquired
in a purchase business combination completed after June 30, 2001 will not be
amortized, but will continue to be evaluated for impairment in accordance with
the appropriate pre-Statement 142 accounting literature. Goodwill and
intangible assets acquired in business combinations completed before July 1,
2001 will continue to be amortized prior to the adoption of Statement 142.
Statement 141 will require upon adoption of Statement 142, that the Company
evaluate its existing intangible assets and goodwill that were acquired in a
prior purchase business combination, and to make any necessary reclassifications
in order to conform with the new criteria in Statement 141 for recognition apart
from goodwill. Upon adoption of Statement 142, the Company will be required to
reassess the useful lives and residual values of all intangible assets acquired
in purchase business combinations, and make any necessary amortization period
adjustments by the end of the first interim period after adoption. In addition,
to the extent an intangible asset is identified as having an indefinite useful
life, the Company will be required to test the intangible asset for impairment
in accordance with the provisions of Statement 142 within the first interim
period. Any impairment loss will be measured as of the date of adoption and
recognized as the cumulative effect of a change in accounting principle in the
first interim period.
In connection with the transitional goodwill impairment evaluation,
Statement 142 will require the Company to perform an assessment of whether there
is an indication that goodwill (and equity-method goodwill) is impaired as of
the date of adoption. To accomplish this the Company must identify its
reporting units and determine the carrying value of each reporting unit by
assigning the assets and liabilities, including the existing goodwill and
intangible assets, to those reporting units as of the date of adoption. The
Company will then have up to six months from the date of adoption to determine
the fair value of each reporting unit and compare it to the reporting unit's
carrying amount. To the extent a reporting unit's carrying amount exceeds its
fair value, an indication exists that the reporting unit's goodwill may be
impaired and the Company must perform the second step of the transitional
impairment test. In the second step, the Company must compare the implied fair
value of the reporting unit's goodwill, determined by allocating the reporting
unit's fair value to all of its assets (recognized and unrecognized) and
liabilities in a manner similar to a purchase price allocation in accordance
with Statement 141, to its carrying amount, both of which would be measured as
of the date of adoption. This second step is required to be completed as soon
as possible, but no later than the end of the year of adoption. Any
transitional impairment loss will be recognized as the cumulative effect of a
change in accounting principle in the Company's statement of earnings.
18
And finally, any unamortized negative goodwill (and negative equity-method
goodwill) existing at the date Statement 142 is adopted must be written off as
the cumulative effect of a change in accounting principle.
As of the date of adoption, the Company expects to have unamortized
goodwill in the amount of $14,325,000, unamortized identifiable intangible
assets in the amount of $5,396,000, and unamortized negative goodwill in the
amount of $0, all of which will be subject to the transition provisions of
Statements 141 and 142. Amortization expense related to goodwill was $1,068,000
and $531,000 for the year ended December 30, 2000 and the six months ended June
30, 2001, respectively. Because of the extensive effort needed to comply with
adopting Statements 141 and 142, it is not practicable to reasonably estimate
the impact of adopting these Statements on the Company's financial statements at
the date of this report, including whether any transitional impairment losses
will be required to be recognized as the cumulative effect of a change in
accounting principle.
19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has not entered into any transactions using derivative
financial instruments or derivative commodity instruments and believes that its
exposure to market risk associated with other financial instruments (such as
investments) are not material.
20
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On May 23, 2001, the Company issued an aggregate of 1,250,000 shares
of its Common Stock, par value $0.01 per share, to the certain persons
associated with Eyeshop (collectively the "Purchasers") who are listed
on Exhibit A to the Common Stock Purchase Agreement by and among the
Company, Eyeshop and the Purchasers, dated May 23, 2001 (incorporated
herein by reference as Exhibit 2.1 hereto). No underwriters were
involved in the transaction listed above. The shares were issued in
connection with the merger with Eyeshop. The aggregate proceeds of
$250,000 will be used by the Company to fund working capital
requirements. The Company relied upon Section 4(2) of the Securities
Act of 1933, as amended, because the above transaction did not involve
any public offering by the Company.
ITEM 5. OTHER INFORMATION
Pursuant to the terms of the Merger Agreement, the Common Stock
Purchase Agreement and the Second Stock Purchase Agreement, certain
members of management of Eyeshop were appointed to management
positions of the Registrant as follows: E. Dean Butler became the
Chairman of the Company's Board of Directors (the "Board"); Carene
Kunkler became the President and Chief Executive Officer and a
Director; and William Connell and Dino Tabacchi were appointed to the
Board. In connection with these appointments, Steve Blinn resigned as
a Director and William T. Sullivan resigned from his positions as
President and Chief Executive Officer and as a Director. As a result
of the foregoing, persons associated with Eyeshop hold four of the
eight seats on the Board.
On July 27, 2001, the Company was served with a complaint filed by
John Cress and Timothy Westra (together, the "Plaintiffs") in Muskegon
County Circuit Court in Michigan on July 6, 2001 against Sight
Resource Corporation (the "Company") and Kent Acquisition Corporation
(a subsidiary of the Company, "Kent"). The complaint alleges two
counts. In the first count, the Plaintiffs allege that Kent and the
Company failed to make payments under certain promissory notes (the
"Kent Notes") issued to the Plaintiffs as part of consideration
pursuant to a Stock Purchase Agreement dated April 1, 1999 by and
among Kent, Kent Optical Company and its related entities (the "Kent
Stock Purchase Agreement") and that such nonpayment constitutes an
event of default under the Kent Notes. Plaintiffs seek relief in the
form of payment of amounts owed on the Kent Notes, including all
applicable interest, costs and attorney fees. In the second count,
the Plaintiffs allege that Kent and the Company failed to make
payments of certain additional consideration under the Kent Stock
Purchase Agreement when the market price of certain shares of the
Company's common stock held by the Plaintiffs did not equal or exceed
$5.00 per share at any time during the period from April 23, 2000 to
April 23, 2001. Plaintiffs seek relief in the form of payment of the
additional consideration owed under the Kent Stock Purchase Agreement,
including all applicable interest, costs and attorney fees.
The outcome of this matter is uncertain and the Company and its legal
advisors are in discussions with the Plaintiffs and their legal
advisors regarding the complaint.
21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Title
----------- ---------------------------------------------------------------------------
2.1 Agreement and Plan of Merger, dated May 23, 2001, by and among Sight
Resource Corporation, Eyeshop Acquisition Corporation and eyeshop.com inc.
(incorporated herein by reference to Annex A to the Company's Definitive
Proxy Statement, filed with the Securities and Exchange Commission (the
"SEC") on June 21, 2001).
2.2 Common Stock Purchase Agreement, dated May 23, 2001, by and among Sight
Resource Corporation, eyeshop.com inc. and the purchasers listed on
Exhibit A attached thereto (incorporated herein by reference to Annex B to
the Registrant's Definitive Proxy Statement, filed with the SEC on June
21, 2001).
2.3 Common Stock Purchase Agreement, dated May 31, 2001, by and among Sight
Resource Corporation and the purchasers listed on Exhibit A attached
thereto (incorporated herein by reference to Annex C to the Registrant's
Definitive Proxy Statement, filed with the SEC on June 21, 2001).
4.1 Letter Agreement, dated May 21, 2001, between Sight Resource Corporation
and Carlyle Venture Partners, L.P. (incorporated herein by reference to
Annex B to the Registrant's Definitive Proxy Statement, filed with the SEC
on June 21, 2001).
10.1 Amended and Restated Third Modification Agreement, dated May 14, 2001,
between Sight Resource Corporation and Sovereign Bank.
10.2* 1992 Employee, Director and Consultant Stock Option Plan, as amended.
------------
* Management contract or compensatory plan, contract or arrangement.
(b) The Company filed the following reports on Form 8-K during the
quarter ended June 30, 2001:
(1) May 25, 2001, under Item 5, relating to the merger between
eyeshop.com inc. and the Company and the common stock
financing.
(2) June 8, 2001, under Item 5, relating to the second common
stock financing.
22
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Sight Resource Corporation
Date: August 14, 2001 By: /S/ CARENE S. KUNKLER
--------------- -----------------------------
Carene S. Kunkler
President and Chief Executive Officer
(principal executive officer)
Date: August 14, 2001 By: /S/ JAMES NORTON
--------------- ---------------------
James Norton
Chief Financial Officer
(principal financial officer)
23
Exhibit Index
Exhibit No. Title
----------- ---------------------------------------------------------------------------
2.1 Agreement and Plan of Merger, dated May 23, 2001, by and among Sight
Resource Corporation, Eyeshop Acquisition Corporation and eyeshop.com inc.
(incorporated herein by reference to Annex A to the Company's Definitive
Proxy Statement, filed with the Securities and Exchange Commission (the
"SEC") on June 21, 2001).
2.2 Common Stock Purchase Agreement, dated May 23, 2001, by and among Sight
Resource Corporation, eyeshop.com inc. and the purchasers listed on
Exhibit A attached thereto (incorporated herein by reference to Annex B to
the Registrant's Definitive Proxy Statement, filed with the SEC on June
21, 2001).
2.3 Common Stock Purchase Agreement, dated May 31, 2001, by and among Sight
Resource Corporation and the purchasers listed on Exhibit A attached
thereto (incorporated herein by reference to Annex C to the Registrant's
Definitive Proxy Statement, filed with the SEC on June 21, 2001).
4.1 Letter Agreement, dated May 21, 2001, between Sight Resource Corporation
and Carlyle Venture Partners, L.P. (incorporated herein by reference to
Annex B to the Registrant's Definitive Proxy Statement, filed with the SEC
on June 21, 2001).
10.1 Amended and Restated Third Modification Agreement, dated May 14, 2001,
between Sight Resource Corporation and Sovereign Bank.
10.2* 1992 Employee, Director and Consultant Stock Option Plan, as amended.
------------
* Management contract or compensatory plan, contract or arrangement.
24