Mail Stop 6010
July 22, 2005
Mr. Richard P. Lindsay
Chief Financial Officer
StockerYale, Inc.
32 Hampshire Road
Salem, New Hampshire
Re: StockerYale, Inc.
Form 10-KSB for the Year Ended December 31, 2004 and
related filings
Form 10-QSB for the Quarter Ended March 31, 2005
File No. 000-27372
Dear Mr. Lindsay:
We have reviewed your filings and have the following
comments.
We have limited our review to matters related to the issues raised
in
our comments. Where indicated, we think you should revise your
document in response to these comments. If you disagree, we will
consider your explanation as to why our comment is inapplicable or
a
revision is unnecessary. Please be as detailed as necessary in
your
explanation. In some of our comments, we may ask you to provide
us
with information so we may better understand your disclosure.
After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your
filings.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-KSB for the Year Ended December 31, 2004
General
1. We note that you have filed your quarterly Exchange Act reports
during 2004 under Regulation S-X. We then note that you filed
your
annual Exchange Act report under Regulation S-B. Please note that
a
reporting company may only file Exchange Act reports under
Regulation
S-B at the beginning of a fiscal year starting with their first
quarterly report. You cannot enter the Regulation S-B system
during
a fiscal year if you have already filed Exchange Act reports for
periods included in that fiscal year under Regulation S-X. Please
amend your report to meet the requirements of Regulation S-X.
Item 7. Financial Statements, page 25
Notes to Financial Statements, page 31
Note 3. Summary of Significant Accounting Policies, page 32
- -Principles of Consolidation, page 32
2. We note that you have consolidated your majority-owned
subsidiaries. Revise your filing to present minority interests
separately in your financial statements, if material.
- -Long-Lived Assets, page 33
3. We note that you recorded asset impairment charges totaling
$1,905,000 and $173,000 for the years ended December 31, 2003 and
2004, respectively. Please tell us and revise this note and MD&A
to
disclose for each material component of the charge how you
measured
the amount of impairment. In addition, disclose the amount of the
charge related to each material component and the substantive
reasons
why each of the charges was necessary. Refer to the guidance in
SFAS
144.
- -Revenue Recognition, page 34
4. We note from your disclosures on pages 3 and 4 that you provide
custom designed laser equipment and custom designed fibers to your
customers. Tell us and revise your filing to explain why it is
appropriate to recognize revenue upon shipment. Within your
discussion, please explain to us whether any of your sales require
post shipment obligations, such as customer acceptance,
installation,
or training.
5. We note from your disclosure on page 5 and throughout the
filing
that you have entered into arrangements to sell your products
through
distributors. Tell us and revise your filing to explain the nature
and significant terms of these arrangements with distributors,
including any post shipment obligations and acceptance provisions.
Tell us and revise your filing to disclose how you account for any
incentives you offer these distributors, such as price protection,
stock rotation or price concessions. Consider revising your
critical
accounting policy disclosure on page 23 to discuss the terms of
your
arrangements with distributors and how management makes estimates
relating to these arrangements.
6. We note from your disclosure on page 22 that you provide
product
warranties to your customers. Revise your footnotes to disclose
the
nature of the warranties that you provide to your customers and
provide all of the disclosures required by paragraph 14 of FIN 45,
if
material.
Note 8. Goodwill, page 39
7. We note from your disclosure on page 50 that you have had
significant operating losses associated with your Illumination
segment and that you have goodwill of $2.7 million related to this
segment. Tell us and revise your filing to explain in greater
detail
how you determined that goodwill was not impaired at December 31,
2004. Refer to the guidance in SFAS 142.
Forms 8-K dated April 15, 2005 and March 8, 2005
8. We note that you have presented non-GAAP financial measures in
your press releases. Your presentation of non-GAAP information
does
not appear to comply with Regulation G and Item 10 of Regulation
S-K.
Please revise future filings to present the most directly
comparable
financial measure calculated and presented in accordance with GAAP
and a reconciliation of the differences between the non-GAAP
financial measure disclosed or released with the most comparable
financial measure or measures calculated and presented in
accordance
with GAAP. Refer to paragraph (e)(1)(i) of Item 10 of Regulation
S-
K.
As appropriate, please amend your 2004 Form 10-KSB and
respond
to these comments within 10 business days or tell us when you will
provide us with a response. You may wish to provide us with
marked
copies of the amendments to expedite our review. Please furnish a
cover letter with your amendments that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendments and
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Tara Harkins, Staff Accountant, at (202)
551-
3639, Kevin Vaughn, Staff Accountant at (202) 551-3643 or me at
(202)
551-3327 if you have questions regarding these comments.
Sincerely,
Michele Gohlke
Branch Chief
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Mr. Richard P. Lindsay
StockerYale, Inc.
July 22, 2005
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