<PAGE>
FORM 10-Q SB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER 333-3544
ON-SITE SOURCING, INC
(Exact name of registrant as specified in its charter)
DELAWARE 54-1648470
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1111 N. 19TH STREET, SUITE 404, ARLINGTON, VA 22209
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (703) 276-1123
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934,
DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT
WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
REGISTRANT HAD 2,586,955 SHARES OF COMMON STOCK OUTSTANDING AS OF JUNE 30, 1996.
<PAGE>
ON-SITE SOURCING, INC.
TABLE OF CONTENTS
Part I. Financial Information. PAGE NO.
Item 1. Financial Statements
Balance sheets -
June 30, 1996 and December 31, 1995 3
Statements of Earnings -
three and six months ended June 30, 1996 and 1995 4
Statements of Stockholders Equity
six months ended June 30, 1996 and 1995 5
Statements of Cash Flows -
six months ended June 30, 1996 and 1995 6
Notes to financial statements 7-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 12-13
Part II. Other Information
Signatures 14
Page 2 of 14
<PAGE>
ON-SITE SOURCING, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
JUNE 30, DECEMBER 31,
1996 1995
---- ----
(UNAUDITED) (AUDITED)
<S> <C> <C>
Current Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . $ 52,156 $ 38,116
Accounts Receivable, Net. . . . . . . . . . . . . . . 1,409,266 809,927
Prepaid supplies. . . . . . . . . . . . . . . . . . . 121,411 54,407
------------- -------------
Total Current Assets. . . . . . . . . . . . . . . . . 1,582,833 902,450
Fixed Assets, net . . . . . . . . . . . . . . . . . . 943,152 500,056
Deferred Offering Costs . . . . . . . . . . . . . . . 406,669 65,585
Other Assets. . . . . . . . . . . . . . . . . . . . . 35,511 9,944
------------- -------------
$ 2,968,165 $ 1,478,035
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable - trade. . . . . . . . . . . . . . . $ 645,304 $ 506,695
Accrued and other liabilities . . . . . . . . . . . . 289,888 148,693
Line of credit and other borrowings . . . . . . . . . 640,000 260,000
Current portion of long-term debt . . . . . . . . . . 129,611 81,954
Deferred Taxes. . . . . . . . . . . . . . . . . . . . 28,500 -
------------- -------------
Total Current Liabilities . . . . . . . . . . . . . . 1,733,303 997,342
Long-term Debt, net of current portion. . . . . . . . 286,761 125,384
Deferred Rent . . . . . . . . . . . . . . . . . . . . 95,588 83,626
Commitments and Contingencies . . . . . . . . . . . . - -
Stockholders' Equity
Common stock, $01 par value, 20,000,000 shares
authorized, 2,586,955 and 2,187,000 shares issued
and outstanding . . . . . . . . . . . . . . . . . . 25,870 21,870
Preferred stock, $01 par value, 1,000,000
authorized, no shares issued and outstanding . . . - -
Additional paid-in capital. . . . . . . . . . . . . . 934,842 488,140
Accounts and notes receivable-shareholders. . . . . . (50,400) -
Accumulated deficit . . . . . . . . . . . . . . . . . (57,799) (238,327)
------------- -------------
852,513 271,683
------------- -------------
$ 2,968,165 $ 1,478,035
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 3 of 14
<PAGE>
ON-SITE SOURCING, INC.
STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue . . . . . . . . . . . . . . . . . . . . . $ 3,726,561 $ 2,252,401 $ 1,929,541 $ 1,100,683
Costs and Expenses
Cost of sales. . . . . . . . . . . . . . . 2,794,009 1,720,020 1,435,407 841,401
Selling and shipping . . . . . . . . . . . 308,870 151,326 160,810 70,579
Administration . . . . . . . . . . . . . . 386,585 246,413 198,097 122,576
------------ ------------ ------------ ------------
3,489,464 2,117,759 1,794,314 1,034,556
------------ ------------ ------------ ------------
Earnings from Operations. . . . . . . . . . . . . 237,097 134,642 135,227 66,127
Other Income (Expense)
Other Income . . . . . . . . . . . . . . . 21,473 - - -
Other expense, primarily interest. . . . . (49,542) (55,126) (17,860) (42,520)
------------ ------------ ------------ ------------
Earnings Before Income Taxes . . . . . . . . . . 209,028 79,516 117,367 23,607
Income Taxes. . . . . . . . . . . . . . . . . . . 28,500 - 28,500 -
------------ ------------ ------------ ------------
Net Earnings. . . . . . . . . . . . . . . . . . . $ 180,528 $ 79,516 $ 88,867 $ 23,607
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net earnings per share. . . . . . . . . . . . . . $ 0.07 $ 0.03 $ 0.03 $ 0.01
------------ ------------ ------------ ------------
Average number of Common Shares and Common Share
Equivalents outstanding during the period. . . 2,648,377 2,648,377 2,648,377 2,648,377
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4 of 14
<PAGE>
ON-SITE SOURCING, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
For the six months ended June 30, 1996
------------------------------------------------------------------------------------
Additional Accounts
Common Common Paid-In and Notes Accumulated
Shares Stock Capital Receivable Deficit Total
------ ----- ------- ---------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996.... 2,187,000 $ 21,870 $ 488,140 $ - $ (238,327) $ 271,683
Sale of Common Stock.......... 399,955 4,000 446,702 - - 450,702
Accounts and Notes - -
Receivable-shareholders..... - - - (115,000) - (115,000)
Payments received - - - 64,600 - 64,600
Net Earnings for the Period... - - - - 180,528 180,528
--------- --------- ---------- ---------- ---------- ----------
Balance at June 30, 1996...... 2,586,955 $ 25,870 $ 934,842 $ (50,400) $ (57,799) $ 852,513
--------- --------- ---------- ---------- ---------- ----------
--------- --------- ---------- ---------- ---------- ----------
For the six months ended June 30, 1995
------------------------------------------------------------------------------------
Additional Accounts
Common Common Paid-In and Notes Accumulated
Shares Stock Capital Receivable Deficit Total
------ ----- ------- ---------- ------- -----
Balance at January 1, 1995.... 2,187,000 $ 21,870 $ 488,140 $ - $ (313,955) $ 196,055
Net Earnings for the Period... - - - - 79,516 79,516
--------- --------- ---------- ---------- ---------- ----------
Balance at June 30, 1995...... 2,187,000 $ 21,870 $ 488,140 $ - $ (234,439) $ 275,571
--------- --------- ---------- ---------- ---------- ----------
--------- --------- ---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 5 of 14
<PAGE>
ON-SITE SOURCING, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1996 1995
---- ----
<S> <C> <C>
Increase (Decrease) in Cash
Cash Flows from Operating Activities
Net Earnings . . . . . . . . . . . . . . . . . . . . . $ 180,528 $ 79,516
--------- --------
Adjustments to reconcile net earnings to net cash from Operations
Depreciation. . . . . . . . . . . . . . . . . . . . . . . 84,745 45,903
Changes in assets and liabilities
Increase in accounts receivable. . . . . . . . . . . . . (599,339) (161,921)
(Increase) decrease in prepaid supplies. . . . . . . . . (67,004) 3,880
Increase in other assets . . . . . . . . . . . . . . . . (25,567) (1,495)
Increase in accounts payable . . . . . . . . . . . . . . 138,609 139,885
Increase in accrued liabilities. . . . . . . . . . . . . 141,195 45,640
Increase in deferred taxes . . . . . . . . . . . . . . . 28,500 -
Increase in deferred rent. . . . . . . . . . . . . . . . 11,962 5,215
--------- --------
Total Adjustments . . . . . . . . . . . . . . . . . . . . . (286,899) 77,107
--------- --------
Net Cash (Used in) Provided by Operating Activities . . . . (106,371) 156,623
--------- --------
Cash Flows Used in Investing Activities
Capital expenditures. . . . . . . . . . . . . . . . . . . (527,841) (96,219)
Cash Flows from Financing Activities
Proceeds from sale of common stock. . . . . . . . . . . . 400,302 -
Borrowings under long-term debt agreements. . . 251,359 -
Payments under long-term debt agreements. . . (42,325) (45,910)
Borrowings under short-term debt agreements . . . . . . . 250,000 -
Net borrowings under line of credit . . . . . . . . . . . 130,000 34
Deferred offering costs . . . . . . . . . . . . . . . . . (341,084) -
--------- --------
Net Cash Provided by (Used in) Financing Activities . . . . 648,252 (45,876)
--------- --------
Net Increase in Cash. . . . . . . . . . . . . . . . . . . . 14,040 14,528
Cash at Beginning of Period . . . . . . . . . . . . . . . . 38,116 7,965
--------- --------
Cash at End of Period . . . . . . . . . . . . . . . . . . . $ 52,156 $ 22,493
--------- --------
--------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 6 of 14
<PAGE>
ON-SITE SOURCING, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
- --------------------------------------------------------------------------------
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed financial statements have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and note disclosures normally
included in the annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to those rules and regulations, although the Company believes that
the disclosures made are adequate to make the information presented not
misleading.
In the opinion of management, the accompanying condensed financial
statements reflect all necessary adjustments and reclassifications that are
necessary for fair presentation for the periods presented. The results of
operations for the six month period ended June 30, 1996, are not
necessarily indicative of the results to be expected for the full year.
For further information, refer to the financial statements and the related
footnotes included in the Company's audited financial statements for the
year ended December 31, 1995.
REVENUE RECOGNITION
Revenue from reprographic services is recognized on a per copy basis upon
completion of the services. Revenue from facilities management is
recognized based on monthly fixed fees and, in certain cases, variable per
copy fees, as contained in facilities management agreements. Revenue from
the sale of refurbished copiers is recognized when the copiers are shipped
and transfer of title occurs.
FIXED ASSETS
Fixed assets consists of copy center equipment, office furniture and
fixtures, and delivery equipment. Depreciation is provided for in
sufficient amounts to relate the cost of depreciable assets to operations
over their estimated service lives, ranging from three to seven years. The
straight line method is followed for financial reporting purposes.
Accelerated methods are used for tax purposes.
CAPITALIZED SOFTWARE
The Company capitalizes certain initial software development costs incurred
after technological feasibility has been demonstrated. Such capitalized
amounts are amortized commencing with product introduction over the lesser
of the expected sales cycle or estimated economic life. Capitalized
software costs are included in Fixed Assets and are not material at June
30, 1996. The unamortized capitalized costs are reduced to an amount not
to exceed the future net realizable value at each balance sheet date.
Page 7 of 14
<PAGE>
ON-SITE SOURCING, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS--CONTINUED
(UNAUDITED)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
- --------------------------------------------------------------------------------
INCOME TAXES
The provision for income taxes presented in the statements of earnings is
based upon the estimated effective tax rate at fiscal year end, and is
largely determined by management's estimate as of the interim date of
projected taxable income for the entire fiscal year.
EARNINGS PER COMMON SHARE
The Company's common stock was split 100-for-one and 18-for-one in March
1995 and February 1996, respectively. All earnings per share amounts in
the financial statements have been restated to give effect to the stock
splits.
Earnings per common share is based on the weighted average number of common
shares and, if dilutive, common equivalent shares outstanding during each
year. Such average shares include the weighted average number of common
shares outstanding (2,187,000 in 1996 and 1995) plus the shares issuable
upon exercise of stock options and warrants after the assumed repurchase of
common shares with the related proceeds (461,377 in 1996 and 1995).
Options and warrants granted, as well as certain shares issued during the
one-year period prior to the initial public offering (see Note G), are
treated as outstanding in calculating earnings per share for both periods
presented.
NOTE B--CREDIT FACILITIES
At June 30, 1996, the Company had available a $450,000 working capital line
of credit at the bank's prime rate (8.25%) plus 1%, which is due on demand.
The credit facility is collateralized by the assets of the Company and
guaranteed by the Company's chairman, and the Company's president and his
spouse. Borrowings under the working capital line of credit at June 30,
1996 were $390,000.
The above note is subject to certain covenants; at various times throughout
the period the Company was in violation of certain covenants. The banks
have waived their rights under the default provisions through December 31,
1996, in connection with the violation of the covenants.
In addition, the Company had other short term borrowing facilities at June
30, 1996 of $100,000 from the underwriter and $150,000 from a bank with
interest rates of 7.75% and 10.25%, respectively. The notes are payable on
demand.
Page 8 of 14
<PAGE>
ON-SITE SOURCING, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS--CONTINUED
(UNAUDITED)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
- --------------------------------------------------------------------------------
On January 30, 1996, the Company borrowed $32,000 from a bank. The note is
payable in equal monthly installments of $1,000 plus 10.5% variable
interest (prime plus 2%) maturing in October 1998. Certain notes are
subject to covenants and are collateralized by the assets of the Company,
and guaranteed by the Company's chairman and the Company's president and
his spouse.
The Company has retired all of the above described bank debt, credit
facilities and short term borrowings with the proceeds of the Company's
initial public offering subsequent to June 30, 1996.
NOTE C--RELATED PARTY TRANSACTIONS
TRANSACTIONS WITH AN OFFICER/SHAREHOLDER
During the six months ended June 30, 1996, the Company recorded the
following transaction with an officer/shareholder:
- During the six months ended June 30, 1996, the Company incurred
approximately $157,600 for legal services rendered by the
officer/shareholder. Included in the accounts payable as of June 30,
1996, is approximately $104,000 in legal fees due to the
officer/shareholder.
TRANSACTIONS WITH A SHAREHOLDER
During the six months ended June 30, 1996, the Company recorded the
following transactions with a shareholder:
- During the six months ended June 30, 1996, the Company recorded
revenue of approximately $166,400 for services provided to a
shareholder under a facilities management agreement. Included in
accounts receivable as of June 30, 1996, is approximately $57,450 due
from the shareholder.
- In March 1996, the Company entered into a two-year consulting
agreement with its underwriters/shareholder for financial and
investment banking services totaling $60,000 to be paid from the
proceeds of the initial public offering which was completed on July 9,
1996.
Page 9 of 14
<PAGE>
ON-SITE SOURCING, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS--CONTINUED
(UNAUDITED)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
ACCOUNTS AND NOTES RECEIVABLE -- SHAREHOLDERS
- The company had a note receivable from an officer/director for $89,900
in connection with the exercise of stock options. The balance of the
note at June 30, 1996 was $50,400. In addition, $25,000 was due from
a shareholder in connection with the purchase of shares. This amount
was paid on April 1, 1996.
NOTE D--COMMITMENTS
The Company has annual rental and lease commitments with a term of one year
or more. Effective March 1, 1996, the Company expanded its Arlington,
Virginia, production facility by approximately 5,100 square feet, and
executed an amendment to its lease agreement. Under the terms of the
amended lease agreement, the lease has been extended to December 1999, and
the annual minimum lease expense has increased from $95,000 to $154,000.
The Company has entered into a lease agreement to expand its operations to
New York City. The lease is for a period of ten years and expires on
October 31, 2006. The annual lease obligation giving effect for step
increases as called for in the agreement is approximately $140,000.
The Company entered into a new lease obligation for its Frederick, Maryland
location for approximately 2,500 square feet. The lease has a term of five
years and expires on May 31, 1999. The annual minimum lease obligation
under the lease is $15,000.
NOTE E--INCENTIVE STOCK OPTION PLAN
In 1995, the Company adopted an incentive stock option plan, under which a
pool of 510,000 shares has been reserved. The plan is administered and
terms of option grants are established by the Board of Directors. Under
the terms of the plan, options may be granted to the Company's employees to
purchase shares of common stock. Options become exercisable ratably over a
vesting period as determined by the Board of Directors, and expire over
terms not exceeding ten years from the date of grant, three months after
termination of employment, or one year after the death or permanent
disability of the employee. The Board of Directors determines the option
price (not less than fair market value) at the date of grant.
Pursuant to an employment agreement, the Company had outstanding options to
sell 162,000 shares of common stock to an officer/director of the Company
at an exercise price of $.56 per share. The options, which were fully
vested during 1994, were exercised on March 29, 1996 for $90,000. In
connection with the exercise of the options, the Company loaned $89,900 to
the officer/director. The loan bears interest at 6% per year with the
remaining principal and interest due April 1, 1998. The balance of the
note on June 30, 1996 was $50,400.
Page 10 of 14
<PAGE>
ON-SITE SOURCING, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS--CONTINUED
(UNAUDITED)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
- --------------------------------------------------------------------------------
At June 30, 1996, the Company had outstanding options to sell 126,000
shares of common stock to an officer/director at an exercise price of $1.11
per share. As of June 30, 1996, the options are fully vested. The options
expire in December, 2000.
The Company has outstanding employee stock options for 207,000 shares of
common stock at exercise prices ranging from $1.11 to $1.39 per share. As
of June 30, 1996, 72,000 of the shares are vested with the remainder
scheduled to vest through December 1998. The options expire through
December 2000.
NOTE F--CONCENTRATION OF CREDIT RISK
Because of the nature of the Company's business, sales to a few customers,
primarily national law firms, have accounted for a significant percentage
of sales. During the six months ended June 30, 1996, one customer
accounted for approximately 10% of total gross sales.
NOTE G--PUBLIC OFFERING
On December 18, 1995, the Company executed a letter of intent for a
proposed initial public offering, whereby the Company was to offer 960,000
units, each consisting of two shares of common stock, $.01 par value and
one common stock purchase warrant, to the public at a price of $6.25 per
unit. The warrants are redeemable by the Company for $.01 per warrant,
upon 30 days prior written notice, provided the average closing bid price
of the common stock for ten consecutive days prior to the date of the
redemption notice is $7.00 or more per share. The Company has also granted
the underwriters an option to purchase up to 144,000 additional units,
exercisable for a period of 45 days after the offering is commenced, solely
to cover overallotments. Upon the closing of the initial public offering,
the underwriters were granted warrants to purchase up to an aggregate of
96,000 units at $10.00 per unit. The warrants are exercisable during a
four-year period commencing one year from the date of the initial public
offering. The registration statement was declared effective on July 9,
1996 and the public offering was completed on that date.
The gross proceeds from the offering were $6,000,000. The net proceeds to
the Company after deducting offering costs were $4,912,381. In connection
with the offering, 1,920,000 shares of common stock and 1,069,123 warrants
were issued. In addition, the underwriter exercised a portion of its
overallotment option on August 15, 1996. The Company issued an additional
140,200 units and received net proceeds of $762,338.
Page 11 of 14
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Six Months 1996 Vs. 1995
- ------------------------
Revenue for the six months ended June 30, 1996 increased 65% to $3,726,561 as
compared to $2,252,401 recorded for the six months ended June 30, 1995. The
revenue increase resulted in an increase in gross profit from $532,381 to
$932,552, an increase of $400,171, or 75%, over the same period in 1995. The
principal reason for the increase is increased volume of work orders fulfilled
by increased capacity at the Rosslyn, VA reprographic facility, increased sales
volume at the Philadelphia facility and the Atlanta facility becoming fully
operational.
For the six months ended June 30, 1996 cost of sales increased $1,073,989 or 62%
over the same period in 1995. In relation to sales, costs of sales and related
gross margin improved due to the acquisition of equipment previously leased,
volume purchasing discounts and increased production per labor hour. As a
percentage of revenue, cost of sales decreased by 1.4% for the six months ended
June 30, 1996 as compared to the same period in 1995.
Selling and shipping increased 104% or $157,544 over the same period last year
due to the addition of personnel, higher commissions associated with increased
revenue, and expansion into new markets.
Administration expenses for the six months ended June 30, 1996 increased
$140,172 or 57% over the same period last year due primarily to increases in
staffing and personnel costs, professional fees, and travel associated with the
expansion into new markets. As a percentage of revenue, administration expenses
decreased by 0.5% for the six months ended June 30, 1996 as compared to the same
period in 1995.
OTHER EXPENSES, PRIMARILY INTEREST
Other expenses decreased 10% or $5,584 over the first six months of 1995 due to
the purchase by the Company of equipment previously under capital leases
resulting in lower interest expense.
EARNINGS
Earnings from operations increased 131%, to $237,097 over the six months ended
June 30, 1995. The increase is due to a $1,474,160 increase in revenue, which
resulted in an increase in gross profit of $400,171 over the same period in
1995. Increases in gross profit were offset by increased selling and
administration over the same period last year of $297,716. As a result,
earnings from operations increased by $102,455. For the period ending June 30,
1996 every additional dollar of revenue over the same period in 1995 resulted in
additional gross margin of $0.27. Net earnings increased 127% to $180,528 from
$79,516 over the same period in 1995.
LIQUIDITY AND CAPITAL RESOURCES AT JUNE 30, 1996 AND SUBSEQUENT ACTIVITY
The Company has been dependent on loans from financial institutions, as well as
private placements of equity securities to finance its working capital needs.
Page 12 of 14
<PAGE>
The start up costs associated with the expansion into new markets has had a
negative impact on the liquidity of the Company during the period. The Company
met its obligations as they became due through aggressive management of its
accounts receivable and supplies, and by obtaining bridge financing through
private placements of its equity securities.
On July 9, 1996 the Company's registration statement was declared effective and
its initial public offering has been completed. Approximately $1,500,000 of the
net proceeds totaling $4,912,381 were used to retire its credit facilities, bank
loans and other borrowings, bridge financing and accounts payable. In addition,
the Company is actively negotiating the buy out of certain equipment leases at
terms considered favorable by the Company.
On August 15, 1996 the Company also received $762,338 in connection with the
underwriters exercise of the overallotment option to the extent of 140,200
units.
The Company anticipates that the net proceeds from the initial public offering,
the exercise of the overallotment options, together with cash flow from
operations, existing cash balances and periodic borrowings under the Company's
bank line of credit will be adequate to meet the Company's expected cash
requirements for the next twelve months. There can be no assurances that
unforeseen events may not require more working capital than the Company has at
its disposal.
Three Months 1996 Vs. 1995
- --------------------------
Revenue for the three months ended June 30, 1996 increased 75% to $1,929,541 as
compared to $1,100,683 for the three months ended June 30, 1995. Cost of sales
and the related gross margin showed a slight improvement over the first quarter
of 1996 with the Atlanta operation nearing profitability. The principal reasons
for the increases in operations for the three months ended June 30, 1996 vs.
1995 are outlined in the discussion of the six month results. There were no
material items adversely impacting the financial position of the Company.
Current liabilities exceeded Current assets by $150,407 at June 30, 1996, due to
additional bridge financing required to fund operations and related costs
associated with the initial public offering.
For the three months ended June 30, 1996 earnings from operations increased 104%
or $69,100 over the three months ended June 30, 1995 and increased 33% or
$33,652 over the first three months of 1996. The increase in earnings from
operations is attributable to a $234,852, or 90% increase in gross margin, from
$259,282 to $494,134 on an increase in revenue of $828,858 to $1,929,541 over
the comparable period in 1995. The increase in gross margin was offset by
increases in selling and administration over the same period in 1995 of
$165,752, an 85% increase.
Net earnings for the three months ending June 30, 1996 increased by $65,260 to
$88,867, a 276% increase over the same period last year. As discussed above, the
increase in net earnings is primarily attributed to increases in gross margin
due to higher revenue, offset by increases in selling and administration.
Page 13 of 14
<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.
On-Site Sourcing, Inc.
---------------------------
Date: August 22, 1996 By: /s/Christopher J. Weiler
---------------- -------------------------------
Christopher J. Weiler
President and CEO
By: /s/Randall C. Reitz
-------------------------------
Randall C. Reitz
Chief Financial Officer
Page 14 of 14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 52,156
<SECURITIES> 0
<RECEIVABLES> 1,409,266
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,582,833
<PP&E> 1,200,327
<DEPRECIATION> 257,175
<TOTAL-ASSETS> 2,968,165
<CURRENT-LIABILITIES> 1,733,303
<BONDS> 0
0
0
<COMMON> 25,870
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 852,513
<SALES> 3,726,561
<TOTAL-REVENUES> 3,726,561
<CGS> 2,794,009
<TOTAL-COSTS> 3,489,464
<OTHER-EXPENSES> (21,473)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,542
<INCOME-PRETAX> 209,028
<INCOME-TAX> 28,500
<INCOME-CONTINUING> 180,528
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 180,528
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
