<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST
EVENT REPORTED): JANUARY 13, 1997 (AUGUST 20, 1996)
COMFORCE CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
- -------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
1-6081 36-2262248
- ----------------------------- ---------------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
2001 MARCUS AVENUE, LAKE SUCCESS, NY 11042
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516) 328-7300
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------
As reported in the Company's Form 8-K dated September 3, 1996, on August
20, 1996, COMFORCE Corporation (the "Company"), through its subsidiary, COMFORCE
Information Technologies, Inc., purchased, pursuant to the Stock Purchase
Agreement entered into on such date with Steve Gunner and Paul Baldwin, all of
the stock of Force Five, Inc. ("Force Five").
The registrant hereby files this Form 8-K/A, Amendment No. 2 to its Form
8-K dated September 3, 1996 as amended by Form 8-K/A, Amendment No. 1 filed
November 1, 1996, to amend the financial statements included under paragraph (a)
of this Item 7.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Balance Sheets of Force Five, Inc. as of December 31, 1995 and July 31,
1996 and the related statements of operations, stockholders'
equity, and cash flows for the year and the seven months then ended.
(b) PRO FORMA FINANCIAL INFORMATION.
Pro forma Consolidated Balance Sheet as of June 30, 1996 (unaudited).
Pro forma Consolidated Statement of Operations for the six months ended
June 30, 1996 (unaudited).
Pro forma Consolidated Statement of Operations for the year ended
December 31, 1995 (unaudited).
Item 7(a)
<PAGE>
FORCE FIVE, INC.
--------
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT ACCOUNTANTS
FOR THE SEVEN-MONTH PERIOD ENDED JULY 31, 1996
AND FOR THE YEAR ENDED DECEMBER 31, 1995
<PAGE>
[LETTERHEAD OF COOPERS & LYBRAND]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Force Five, Inc.:
We have audited the accompanying balance sheets of Force Five, Inc. as of July
31, 1996 and December 31, 1995, and the related statements of operations,
stockholders' equity, and cash flows for the seven-month period ended July 31,
1996 and for the year ended December 31, 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Force Five, Inc. as of July
31, 1996 and December 31, 1995, and the results of its operations and its cash
flows for the seven-month period ended July 31, 1996 and for the year ended
December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ Coopers & Lybrand L.L.P.
Dallas, Texas
October 23, 1996
1
<PAGE>
FORCE FIVE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JULY 31, DECEMBER 31,
1996 1995
ASSETS ---------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................ $ 38,809 $ 400
Trade accounts receivable (net of allowance for doubtful
accounts of
$44,630 at July 31, 1996)............................... 966,760 988,326
Advances receivable from employees....................... 23,359 26,487
Prepaid expenses and other assets........................ 27,947 4,120
---------- ----------
Total current assets................................... 1,056,875 1,019,333
Property and equipment, net................................ 91,559 52,406
Deferred income taxes...................................... 7,478 3,354
Other assets............................................... 387 387
---------- ----------
Total assets........................................... $1,156,299 $1,075,480
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable................................... $ 34,127 $ 32,526
Accrued liabilities...................................... 380,850 362,322
Deferred income taxes.................................... 126,796 171,925
Line of credit........................................... 400,000 100,000
Note payable............................................. 92,130
---------- ----------
Total current liabilities.............................. 941,773 758,903
---------- ----------
Stockholders' equity:
Common stock, 100,000 shares authorized, 10,000 shares,
$1.00 par value......................................... 10,000 10,000
Retained earnings........................................ 241,526 343,577
Treasury stock, at cost.................................. (37,000) (37,000)
---------- ----------
Total stockholders' equity............................. 214,526 316,577
---------- ----------
Total liabilities and stockholders' equity........... $1,156,299 $1,075,480
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
FORCE FIVE, INC.
STATEMENTS OF OPERATIONS
FOR THE SEVEN-MONTH PERIOD ENDED JULY 31, 1996
AND FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
JULY 31, DECEMBER 31,
1996 1995
----------- ------------
<S> <C> <C>
Sales................................................ $ 4,598,183 $ 7,066,900
----------- -----------
Direct costs and expenses:
Cost of sales...................................... (3,454,072) (5,287,437)
General and administrative expenses................ (1,288,273) (1,391,784)
----------- -----------
Total direct costs and expenses.................. (4,742,345) (6,679,221)
----------- -----------
(144,162) 387,679
Other income......................................... 36,000
Interest expense..................................... (7,142) (47,627)
----------- -----------
Income (loss) before provision for income taxes...... (151,304) 376,052
Income tax benefit (provision)....................... 49,253 (120,092)
----------- -----------
Net income (loss)................................ $ (102,051) $ 255,960
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
FORCE FIVE, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SEVEN-MONTH PERIOD ENDED JULY 31, 1996
AND FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
COMMON STOCK RETAINED TREASURY
-------------- --------- ---------------- ---------
SHARES AMOUNT EARNINGS SHARES AMOUNT TOTAL
------ ------- --------- ------ -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1995................... 10,000 $10,000 $ 87,617 $ 97,617
Net income.............. 255,960 255,960
Purchase of common stock
for treasury........... (1,000) $(37,000) (37,000)
------ ------- --------- ------ -------- ---------
Balance at December 31,
1995................... 10,000 10,000 343,577 (1,000) (37,000) 316,577
Net loss................ (102,051) (102,051)
------ ------- --------- ------ -------- ---------
Balance at July 31,
1996................... 10,000 $10,000 $ 241,526 (1,000) $(37,000) $ 214,526
====== ======= ========= ====== ======== =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
FORCE FIVE, INC.
STATEMENTS OF CASH FLOWS
FOR THE SEVEN-MONTH PERIOD ENDED JULY 31, 1996
AND FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
JULY 31, DECEMBER 31,
1996 1995
--------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss).................................... $(102,051) $ 255,960
Adjustments to reconcile net income (loss) to cash
flows provided by operating activities:
Provision for bad debt............................. 44,630
Depreciation....................................... 13,978 18,593
Gain on sale of intangible assets.................. (36,000)
Deferred income taxes.............................. (49,253) 120,092
Changes in operating assets and liabilities:
Increase in trade accounts receivable............ (23,064) (423,297)
Decrease (increase) in advances receivable from
employees....................................... 3,128 (17,400)
Increase in prepaid expenses and other assets.... (23,827) (3,162)
Increase in trade accounts payable............... 1,601 23,002
Increase in accrued liabilities.................. 18,528 221,053
--------- ---------
Net cash (used in) provided by operating
activities.................................... (116,330) 158,841
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment................... (53,131) (55,769)
--------- ---------
Net cash used in investing activities.......... (53,131) (55,769)
--------- ---------
Cash flows from financing activities:
Payments on line of credit, net...................... (75,000)
Proceeds from new line of credit, net................ 300,000 100,000
Proceeds from note payable........................... 100,000
Payments on note payable............................. (92,130) (7,870)
Payments on loans from directors and their
associates.......................................... (262,583)
Purchase of treasury stock........................... (1,000)
--------- ---------
Net cash provided by (used in) financing
activities.................................... 207,870 (146,453)
--------- ---------
Net increase (decrease) in cash and cash equivalents... 38,409 (43,381)
Cash and cash equivalents, beginning of period......... 400 43,781
--------- ---------
Cash and cash equivalents, end of period............... $ 38,809 $ 400
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest........................................... $ 7,142 $ 63,593
Taxes.............................................. $ 17,000 --
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
FORCE FIVE, INC.
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS:
Force Five, Inc., a Texas corporation, provides contract data processing
services to the information technology industry primarily in Arkansas,
California and Texas.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
REVENUE RECOGNITION: Revenue for providing staffing services is recognized
at the time such services are rendered.
CASH AND CASH EQUIVALENTS: Cash and cash equivalents include highly liquid,
short-term investments with an original maturity date of three months or less.
Trade accounts payable includes a book overdraft of $2,863 as of December
31, 1995.
TRADE ACCOUNTS RECEIVABLE: Trade accounts receivable consist of those
amounts due to the Company for staffing services rendered to various
customers.
PROPERTY AND EQUIPMENT: Property and equipment are stated at cost.
Expenditures for maintenance and repairs are charged to operations as
incurred. Expenditures for betterments and major renewals are capitalized. The
cost of assets sold or retired and the related amount of accumulated
depreciation are eliminated from the accounts in the year of disposal, with
any profit or loss included in income.
Depreciation and amortization of assets are provided using the straight-line
method over the estimated useful life of the asset.
INCOME TAXES: The Company recognizes deferred tax liabilities and assets for
the expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the difference between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
A valuation allowance is recorded when necessary to reduce deferred tax assets
to their expected realizable value.
USE OF ESTIMATES: The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
3. PROPERTY AND EQUIPMENT:
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
LIFE OF JULY 31, DECEMBER 31,
EQUIPMENT 1996 1995
--------- -------- ------------
<S> <C> <C> <C>
Office equipment.............................. 4 years $ 61,245 $41,694
Furniture and fixtures........................ 10 years 14,566 10,071
Automobiles................................... 4 years 53,085 24,000
-------- -------
128,896 75,765
Less accumulated depreciation................. 37,337 23,359
-------- -------
$ 91,559 $52,406
======== =======
</TABLE>
6
<PAGE>
FORCE FIVE, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. INCOME TAXES:
The difference between the statutory federal income tax rate and the
effective income tax rate is reconciled as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF EARNINGS
BEFORE INCOME TAXES
--------------------------
SEVEN-MONTH YEAR ENDED
PERIOD ENDED DECEMBER 31,
JULY 31, 1996 1995
------------- ------------
<S> <C> <C>
Statutory federal tax rate........................ (34.0) 34.0
Nontaxable gain on sale of intangible assets...... (3.4)
Nondeductible expenses and life insurance
premiums......................................... 1.5 1.3
----- ----
(32.5) 31.9
===== ====
</TABLE>
Temporary differences between the tax bases of assets and liabilities and
their financial reporting amounts that give rise to the deferred tax
liabilities and deferred tax assets at July 31, 1996 and December 31, 1995 and
their approximate tax effects are as follows:
<TABLE>
<CAPTION>
1996 1995
----------------------- ----------------------
TEMPORARY TAX TEMPORARY TAX
DIFFERENCE DIFFERENCE DIFFERENCE DIFFERENCE
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Property and equipment........... $ 21,994 $ 7,478 $ 9,866 $ 3,354
Accrued other.................... 403,338 137,135 388,202 131,988
Net operating loss............... 190,495 64,768 94,459 32,117
Provision for bad debt........... 44,630 15,174
----------- --------- --------- ---------
Total deferred tax asset..... $ 660,457 224,555 $ 492,527 167,459
=========== --------- ========= ---------
Trade accounts receivable........ $(1,011,390) (343,873) $(988,326) (336,030)
----------- --------- --------- ---------
Total deferred tax liability. $(1,011,390) (343,873) $(988,326) (336,030)
=========== --------- ========= ---------
Net deferred tax liability. $(119,318) $(168,571)
========= =========
</TABLE>
At July 31, 1996 and December 31, 1995, the Company had a federal income tax
loss carryforward of approximately $190,000 and $94,000, respectively,
available to be applied against future taxable income, if any, expiring
principally in 2008 - 2010. Section 382 of the Internal Revenue Code of 1986
limits a corporation's utilization of its federal income tax loss
carryforwards when certain changes in the ownership of a corporation's common
stock occurs.
7
<PAGE>
FORCE FIVE, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
5. CONCENTRATION OF CREDIT RISK:
The Company's trade accounts receivable as of July 31, 1996 and December 31,
1995 consist primarily of amounts due from major companies requiring the use
of Information Technology contract consultants. As a result, the
collectibility is spread across various industries and is not dependent on any
particular industry sector. At July 31, 1996 and December 31, 1995, the
Company had six and five customers, respectively, with trade accounts
receivable balances that aggregated 50% and 60%, respectively, of the
Company's total accounts receivable. Percentages of total revenues from
significant customers for the seven-month period ended July 31, 1996 and the
year ended December 31, 1995 are summarized as follows:
<TABLE>
<CAPTION>
JULY 31, DECEMBER 31,
1996 1995
-------- ------------
<S> <C> <C>
Customer 1.............................................. 13.8% 20.0%
Customer 2.............................................. 10.4% 17.3%
Customer 3.............................................. 7.1% 7.7%
</TABLE>
In August 1996, a customer of the Company filed for Chapter 11 bankruptcy
protection. The Company has recorded a reserve which management believes is
adequate to reduce the pre-petition receivables to their net realizable
amount.
The Company maintains cash in bank accounts which at times may exceed
federally insured limits. The Company has not experienced any losses in such
accounts and believe they are not exposed to any significant credit risk on
their cash balances. The Company believes it mitigates such risk by investing
its cash through major financial institutions.
6. ACCRUED EXPENSES:
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
JULY 31, DECEMBER 31,
1996 1995
-------- ------------
<S> <C> <C>
Payroll and payroll expenses............................ $ 10,035 $125,000
Bonuses, primarily to related parties................... 313,683 227,879
Other................................................... 57,132 9,443
-------- --------
$380,850 $362,322
======== ========
</TABLE>
7. COMMITMENTS AND CONTINGENCIES:
At December 31, 1995, future maximum annual rental commitments under
noncancelable operating leases are as follows:
<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
1996................................................................. $ 75,752
1997................................................................. 75,746
1998................................................................. 90,912
1999................................................................. 6,235
2000................................................................. 6,235
Thereafter........................................................... 1,559
--------
$256,439
========
</TABLE>
Total rent expense for the seven-month period ended July 31, 1996 and the
year ended December 31, 1995 was $47,233 and $73,769, respectively.
8
<PAGE>
FORCE FIVE, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
8. DEBT:
Effective June 30, 1995, the Company entered into a credit agreement with a
bank that provides a revolving line of credit and a note payable. The credit
agreement is collateralized by substantially all of the Company's assets and
is personally guaranteed by the two stockholders.
As of July 31, 1996 and December 31, 1995, the revolving line of credit
allowed borrowings up to $500,000 and $300,000, respectively. The Company does
not pay a commitment fee on the unused portion. The line of credit bears
interest on the outstanding balance at the bank's prime rate plus 1.5% (9.75%
and 10% at July 31, 1996 and December 31, 1995, respectively). The commitment
expired and the outstanding balance was paid in full in August 1996.
The note payable bears interest at 10.5% and was paid in full in 1996.
The fair value of the credit agreement approximates the carrying amount.
During 1995, the Company paid in full a revolving line of credit with a bank
that had an outstanding balance of $75,000 at the beginning of the year.
9. SUBSEQUENT EVENT:
Effective July 31, 1996, Comforce Information Technologies, Inc. acquired
all of the issued and outstanding common stock of the Company for a purchase
price of $2,000,000, with a three-year contingent payout based on the future
earnings of the Company. The value of the payout will not exceed $2,000,000.
10. RELATED PARTY TRANSACTIONS:
During 1995, the Company paid in full loans to directors of the Company and
their associates that had an outstanding balance of $262,583 at the beginning
of the year. The Company paid $53,546 of interest related to these loans
during the year.
Bonuses of $304,350 and $190,000 accrued at July 31, 1996 and December 31,
1995, respectively, are payable to officers/stockholders of the Company.
Effective June 1, 1995, the Company acquired 1,000 shares of its common
stock for treasury for a purchase price of $1,000 and the assignment of
certain contracts to the selling stockholder. The Company recorded this
transaction at fair value and recognized a gain of $36,000, which is included
in other income for the year ended December 31, 1995.
9
<PAGE>
Item 7(b)
The following unaudited pro forma condensed consolidated balance sheet at June
30, 1996 presents the financial position of the company at June 30, 1996 as if
the acquisition of FORCE Five, Inc. had been consummated as of June 30,1996. The
unaudited pro forma condensed consolidated statement of operations for the year
ended December 31 ,1995 and the six months ended June 30 ,1996 presents the
company's results of operations as if the acquisitions of COMFORCE Global,
Williams, RRA Inc., and Force Five had been consummated as of January 1, 1995.
<TABLE>
<CAPTION>
COMFORCE CORPORATION
PRO FORMA BALANCE SHEET
JUNE 30, 1996
FORCE Pro Forma Pro Forma
Historical Five Adjustments Consolidated
<S> <C> <C> <C> <C>
Current Assets
Cash and equivalents 2,278 39 (89) (A)(B) 2,228
Receivables, including $487 of unbilled revenue. 6,709 966 (966) (A) 6,709
Prepaids 119 28 (28) (A) 119
Officer Loans 331 - - 331
other 218 23 (23) (A) 218
Receivables from ARTRA GROUP incorporated - - - -
----------------------------- ---------
9,655 1,056 (1,106) 9,605
----------------------------- ---------
Property,plant and equipment , net 352 92 (46) (A) 398
----------------------------- ---------
Other assets:
Intangibles net 12,051 - 1,954 (A) 14,005
other 66 8 (8) (A) 66
----------------------------- ---------
12,117 8 1,946 14,071
----------------------------- ---------
22,124 1,156 794 24,074
============================= =========
Current Liabilities
Revolving credit line 1,500 1,450 (B) 2,950
Revolving credit line due a bank 400 (400) (A)
Accounts Payable 566 34 (34) (A) 566
Accrued Expenses 1,145 381 (381) (A) 1,145
Income Taxes 265 127 (127) (A) 265
Liabilities to be assumed by ARTRA GROUP Incorporated
and net of liabilities of discontinued operations 1,794 - - 1,794
----------------------------- ---------
5,270 942 508 6,720
----------------------------- ---------
Obligations expected to be settled by the issuance of stock 550 - - 550
----------------------------- ---------
SHAREHOLDERS EQUITY
Series E preffered stock 1 - - 1
Series D preffered stock 1 - - 1
Common stock 96 10 (10) (A) 96
Additional paid-in capital 15,754 - 500 (C) 16,254
Treasury stock, at cost (37) 37 (A)
Retained earnings 452 241 (241) (A) 452
----------------------------- ---------
16,304 214 286 16,804
----------------------------- ---------
22,124 1,156 794 24,074
============================= =========
</TABLE>
Pro Forma adjustments to the unaudited condensed consolidated balance sheet
consist of:
(A) Record acquisition of FORCE Five Inc. and related entries and eliminate
FORCE Five Inc. assets and liabilities not purchased or assumed.
(B) Record Borrowings of $1,450,000 under the Chase line of credit and the use
of cash on hand of $50,000 used to finance the purchase of Force Five Inc.
(C) Record Issuance of 27,398 shares of Common stock with a Market value of
$500k issued in connection with the Purchase of Force Five, Inc.
<PAGE>
<TABLE>
<CAPTION>
COMFORCE CORPORATION
Pro Forma Statement Of Operations
For The Year Ended December 31, 1995
COMFORCE FORCE Pro Forma
Historical(A) Global(B) Williams(B) RRA INC(B) Five Adjustments Pro Forma
------------------------ ----------- --------------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES $ 2,387 $9,568 $ 4,178 $ 52,011 $7,067 $75,211
Operating costs and expenses
Cost of Revenues 1,818 7,178 3,022 47,830 5,287 65,135
Stock compensation(C) 3,425 3,425
Spectrum corporate management fees (F) 1,140 1,140
Other Operating costs and Expenses 823 1,397 450 2,992 1,392 $115 (D) 7,169
--------- ------- ------- --------- -------- -------- -------
6,066 9,715 3,472 50,822 6,679 115 76,869
--------- ------- ------- --------- -------- -------- -------
Operating earnings (loss) (3,679) (147) 706 1,189 388 (115) (1,658)
--------- ------- -------- --------- -------- -------- -------
Other Income 36 36
Interest and other non-operating expenses (618) 7 (133) (47) 125 (E) (666)
--------- ------- -------- --------- -------- -------- -------
(618) 7 (133) (11) 125 (630)
--------- ------- -------- --------- -------- -------- --------
Earnings(loss) from operations
before income taxes (4,297) (140) 706 1,056 377 10 (2,288)
(provision) credit for income taxes (35) 21 (354) (422) (120) (4) (914)
--------- -------- -------- --------- -------- -------- --------
Income(loss) from operations $(4,332) $ (119) $ 352 $ 634 $257 $ 6 $(3,202)
======== ======= ========== ========= ======== ======= ========
Income(loss) per share from continuing operations $ (0.95) ($ 0.35)
======== ========
weighted Average (G) 4,596 9,059
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMFORCE CORPORATION
Pro Forma Statement Of Operations
For The Six Months Ended June 30, 1996
Pro Forma
Historical(A) Williams(B) RRA INC(B) FORCE Five Adjustments Pro Forma
----------------------------------------------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES $13,158 $ 654 $ 22,786 $4,492 $41,090
Operating costs and expenses
Cost of Revenues 11,002 281 20,762 3,324 35,369
Other Operating costs and Expenses 1,401 38 1,491 954 $ 171 (D) 4,055
-------------------------------------------------------------------------
12,403 319 22,253 4,278 171 39,424
-------------------------------------------------------------------------
Operating earnings (loss) 755 335 533 214 (171) 1,666
Other income net 16 16
Interest and other non-operating expenses (51) (36) (5) (90) (E) (182)
-------------------------------------------------------------------------
(35) (36) (5) (90) (166)
-------------------------------------------------------------------------
Earnings(loss) from operations
before income taxes 720 335 497 209 (261) 1,500
(provision) credit for income taxes (268) (265) (199) (83) 104 (711)
-------------------------------------------------------------------------
Income(loss) from operations $ 452 $ 70 $ 298 $ 126 $ (157) $ 789
=========================================================================
Income(loss) per share from continuing
operations $ 0.03 $ 0.06
----------- ----------
weighted Average (E) 13,819 13,847
=========== ==========
</TABLE>
<PAGE>
(A) Historical data for the year ended December 31, 1995 includes COMFORCE
Global's operations since its acquisition on October 17, 1995 through December
31, 1995 and corporate overhead costs for the entire year ended December 31,
1995. Historical data for the six months ending June 30, 1996 includes
COMFORCE Global's operations since January 1, 1996. Williams operations since
March 3, 1995, and RRA operations since May 10, 1996.
(B) The pro forma data presented for the operations of COMFORCE Global,
Williams, RRA, and Force Five is for the periods prior to their acquisitions.
COMFORCE Global was acquired October 17, 1995, Williams was acquired March 3,
1996, RRA was acquired on May 10 1996, and Force Five was acquired on August 20,
1996 effective (July 31, 1996).
(C) Represents a non-recurring compensation charge related to the issuance
of the 35% common stock interest in the Company to certain individuals to
manage the company's entry into and development of the telecommunications and
technical staffing business.
(D) Amortization of goodwill arising out of the Global, Williams, RRA Inc.,
and Force Five acquisitions, net of bonuses of $228,000 in 1995 to the sellers
of Force Five which will not be recurring under their employment contract. The
Table below reflects the amounts and where acquisitions' amortization of
goodwill has been recorded.
1995 1996
-------------------
Global 243 121
Williams 52 26
RRA, Inc. 164 82
Force Five 52 26
Less: Historical Amortization (168) (84)
----------------
Proforma Adjustment $ 343 $ 171
================
(E) Reverse interest expense on notes and other liabilities assumed by
ARTRA totaling $410,000 net of interest expense incurred for the purchase of
Williams and Force Five for the Proforma year ended December 31, 1995. Interest
expense for December 31, 1995 represents interest on the line of credit assuming
all $3,350,000 was outstanding for the year at the interest rate in effect of
8.5%. Interest expense for 1996 assumes that $3,350,000 was outstanding from
January 1, 1996 to March 3, 1996 and $1,450,000 was outstanding from March 3,
1996 to June 30, 1996. The interest expense reversed in 1995 was for interest on
notes directly related to The Lori Corporation activities and was incurred in
1995.
<PAGE>
(F) Corporate management fees from COMFORCE Global's former parent,
Spectrum Information Technologies, Inc. The amount of these management fees
may not be representative of costs incurred by COMFORCE Global on a stand alone
basis.
(G) Pro forma weighted average shares outstanding and common stock
equivalents includes shares of the Company's Common Stock issued and to be
issued in the COMFORCE Global transaction, shares issued for less and costs
associated with the COMFORCE Global transaction, shares issued to certain
individuals to manage the Company's entry into the telecommunications and
technical staffing business, shares reserved for issuance in the private
placement of Series E preferred Stock issued in conjunction with the purchase of
RRA, and shares issued as partial consideration to the sellers of Force Five.
<PAGE>
SIGNATURE
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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.
COMFORCE Corporation
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(Registrant)
By /s/ Andrew Reiben
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Andrew Reiben, Chief Accounting Officer
Dated: January 7, 1997
