<PAGE> 1
U.S. Securities and Exchange Commission
Washington. D.C. 20549
Form 10-QSB
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 1995
-------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
----------------- -------------------
Commission file number 1-9629
------------------------------------------
WINSTON RESOURCES, INC.
-------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 13-3134278
--------------------------------------------- ---------------------------------
(State or other jurisdiction of incorporation (IRS Employer
or organization Identification No.)
535 Fifth Avenue, New York, New York 10017-3662
-------------------------------------------------------------------------
(Address of principal executive offices)
( ) - (212) 557-5000
------------------------------------------
(Issuer's telephone number)
NOT APPLICABLE
--------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
-- --
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
-- --
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: 2,917,133 shares of Common
Stock, par value $.01 per share, outstanding on August 11, 1995.
<PAGE> 2
WINSTON RESOURCES, INC., AND SUBSIDIARIES
TABLE OF CONTENTS
-----------------
PART I - FINANCIAL INFORMATION
------------------------------
Item 1 Financial Statements
Consolidated Balance Sheet
-June 30, 1995 (unaudited) 1&2
Consolidated Statements of Operations
-Three months ended June 30, 1995 and 1994 (unaudited) 3
-Six months ended June 30, 1995 and 1994 (unaudited) 4
Consolidated Statements of Cash Flows
-Six months ended June 30, 1995 and 1994 (unaudited) 5
Notes to Consolidated Financial Statements 6&7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 8&9
PART II - OTHER INFORMATION
----------------------------
Item 6 Exhibits and Reports on Form 8-K 10
<PAGE> 3
WINSTON RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS AT JUNE 30, 1995
(Unaudited)
ASSETS
(Note 4)
<TABLE>
<S> <C>
Current assets:
Cash $ 118,000
Accounts and notes receivable, trade, net 5,213,000
Prepaid expenses and other current assets 196,000
-------------
Total current assets 5,527,000
Fixed Assets, net 299,000
Other assets:
Long-term portion of notes receivable 168,000
Security deposits and other assets 501,000
Restrictive covenants and other
intangibles, net 896,000
-------------
Total $ 7,391,000
=============
</TABLE>
See Notes to Consolidated Financial Statements.
PAGE 1
<PAGE> 4
WINSTON RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS AT JUNE 30, 1995
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C>
Current liabilities:
Accounts payable and accrued expenses $ 2,116,000
Credit facility debt (Note 4) 955,000
Capital lease obligation 48,000
---------------
Total current liabilities 3,119,000
Deferred rent 385,000
Deferred credit - net (Note 2) 1,000
Long-term portion of credit facility debt 500,000
Long-term portion of capital lease obligation 49,000
---------------
Total liabilities 4,054,000
Contingencies (Note 5)
Stockholders' equity (Note 3):
Preferred stock - $100 par value; authorized
2,000,000 shares, no shares issued
Common stock, $.01 par value; authorized
10,000,000 shares, issued and outstanding
2,917,133 shares 29,000
Additional paid-in capital 4,394,000
Accumulated deficit (1,086,000)
---------------
Total stockholders' equity 3,337,000
---------------
Total $ 7,391,000
===============
</TABLE>
See Notes to Consolidated Financial Statements.
PAGE 2
<PAGE> 5
WINSTON RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
------------ -------------
<S> <C> <C>
Revenue:
Placement fees and related income $7,909,000 $5,905,000
---------- ----------
Operating expenses:
Compensation and other benefits 5,879,000 4,252,000
Selling, general and administrative 1,737,000 1,401,000
Amortization of intangibles 38,000 39,000
---------- ----------
7,654,000 5,692,000
---------- ----------
Income from operations 255,000 213,000
---------- ----------
Interest expense, net 58,000 22,000
---------- ----------
Income before provision for income taxes 197,000 191,000
Provision for income taxes 42,000 38,000
---------- ----------
Net income $ 155,000 $ 153,000
========== ==========
Primary and fully diluted net income
per common share $0.05 $0.05
========== ==========
Weighted average number of common shares
outstanding
Primary 3,188,399 3,145,361
Fully diluted 3,188,399 3,145,361
</TABLE>
See Notes to Consolidated Financial Statements.
PAGE 3
<PAGE> 6
WINSTON RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Revenue:
Placement fees and related income $15,123,000 $11,237,000
----------- -----------
Operating expenses:
Compensation and other benefits 11,146,000 8,073,000
Selling, general and administrative 3,366,000 2,718,000
Amortization of intangibles 76,000 78,000
----------- -----------
14,588,000 10,869,000
----------- -----------
Income from operations 535,000 368,000
----------- -----------
Interest expense, net 115,000 47,000
----------- -----------
Income before provision for income taxes 420,000 321,000
Provision for income taxes 139,000 64,000
----------- -----------
Net income $ 281,000 $ 257,000
=========== ===========
Primary and fully diluted net income
per common share $0.09 $0.08
=========== ===========
Weighted average number of common shares
outstanding
Primary 3,176,003 3,152,666
Fully diluted 3,183,740 3,152,666
</TABLE>
See Notes to Consolidated Financial Statements.
PAGE 4
<PAGE> 7
WINSTON RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 281,000 $ 257,000
Charges and credits to net income not
affecting cash:
Depreciation and amortization 138,000 118,000
Provision for doubtful receivables 25,000 (21,000)
Deferred rent (13,000) 30,000
Deferred income recognized 16,000
Changes in assets and liabilities:
(Increase) in Accounts receivable (365,000) (510,000)
(Increase) in Prepaid expenses and
other current assets (73,000) (18,000)
(Increase) in Security deposits and other assets (139,000) (40,000)
Increase (Decrease) in Accounts payable
and accrued expenses (231,000) 283,000
----------- -----------
Net cash provided by (used in) operating activities (377,000) 115,000
----------- -----------
Cash flows (used in) investing activities:
Purchases of fixed assets (28,000) (35,000)
----------- -----------
Cash flows from financing activities:
Proceeds from (payments on) short term and long-term debt 230,000 (37,000)
----------- -----------
Net increase (decrease) in cash (175,000) 43,000
Cash at beginning of period 293,000 217,000
----------- -----------
Cash at end of period $ 118,000 $ 260,000
=========== ===========
Supplemental cash flows information:
Cash paid during the period for:
Interest $ 141,000 $ 95,000
----------- -----------
Income taxes $ 140,000 $ 17,000
----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements.
PAGE 5
<PAGE> 8
WINSTON RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995
1. In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting only of normal recurring accruals and adjustments)
necessary to present fairly the financial position of the
Company as of June 30, 1995, the results of its operations for
the six months and three months ended June 30, 1995 and June
30, 1994 and changes in its cash flows for the six months
ended June 30, 1995 and June 30, 1994. The accompanying
unaudited consolidated financial statements have been prepared
in accordance with the instructions to Forms 10-QSB and do not
include all of the information and footnotes required by
generally accepted accounting principles for complete
financial statements. Operating results for the six and three
months ended June 30, 1995 are not necessarily indicative of
operating results that may be expected for the year ending
December 31, 1995. The accompanying consolidated financial
statements should be read in conjunction with the Company's
Annual Report to shareholders and Annual Report in Form 10-KSB
for the year ended December 31, 1994.
2. The deferred credit resulting from the sale of certain assets
of the Company' s wholly-owned subsidiary, E.G. Todd Associates,
Inc., to E.G. Todd Physicians Search, Inc., consists of the
following:
<TABLE>
<CAPTION>
June 30, 1995
-------------
<S> <C>
Potential deferred gain $1,231,000
Potential deferred
interest income 1,000
----------
1,232,000
Less: Note receivable
from purchaser 1,140,000
Advances to purchaser 91,000
----------
Deferred credit, net $ 1,000
----------
</TABLE>
3. On January 3, 1995 options to acquire 90,000 shares were
granted under the Company's Incentive Program at exercise
prices ranging from $1.50 to $1.65 per share. On January 6,
1995, options to acquire 6,000 shares were granted under the
Company's Incentive Program at an exercise price of $1.375 per
share. At June 30, 1995, options to purchase 518,667 shares
are outstanding and options to purchase 50,700 shares are
available for grant.
Page 6
<PAGE> 9
Winston Resources, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Six Months ended June 30, 1995
4. On April 24, 1995, the Company renewed their secured credit
facility with a finance company. The lending facility
provides for short term advances to a maximum of $2,500,000,
which currently bear interest at a rate of 3-1/4% above the
finance company's reference rate (9.00% at June 30, 1995),
based on up to 80% of eligible accounts receivable. The
credit facility is collateralized by substantially all the
assets of the Company.
On April 10, 1995, the finance company agreed to defer
$500,000 of the credit facility debt until April 16, 1997.
5. Litigation
----------
In the opinion of management, after consultation with counsel,
there are no matters pending whose ultimate resolution would
have a material adverse effect on the Company's financial
position.
6. Income per share is computed using the weighted average number
of common shares outstanding. Common stock equivalents,
assuming the exercise of stock options, are included in the
calculation of net income per share when there is a dilutive
effect.
Page 7
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations for the Three Months ended June 30, 1995
--------------------------------------------------------------
compared to the Three Months ended June 30, 1994.
-------------------------------------------------
Revenues
--------
Revenues increased by approximately $2,004,000 or 34%. The
increase in the quarter ended June 30, 1995 is primarily due to the
increase in temporary help revenues as compared to the
corresponding period in 1994.
Operating Expenses
------------------
Operating expenses increased approximately 34% in the quarter ended
June 30, 1995 as compared to the corresponding period in 1994. The
increase is mainly due to increased compensation and compensation
related costs associated with the increase in revenues. Increases
also resulted from additions to the sales force and administrative
areas primarily for the Long Island, New York office opened October
1994 and recently started nursing and legal divisions.
Net interest expense increased during 1995 due mainly to the
maintenance of a higher average loan balance as compared to 1994
partially offset by lower interest rates and interest income.
Operating Results
-----------------
Net income for the three month period ended June 30, 1995 was
approximately $155,000 or $.05 per common share as compared to net
income of approximately $153,000 or $.05 per common share in the
prior year's second quarter. The results remained level as a result
of increased revenues being offset by the increase in operating
expenses.
Page 8
<PAGE> 11
MANAGEMENT'S DISCUSSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations for the Six Months ended June 30, 1995
------------------------------------------------------------
compared to the Six Months ended June 30, 1994.
-----------------------------------------------
Revenues
--------
Revenues increased by approximately $3,886,000 or 35%. The
increase for the six months ended June 30, 1995 is primarily due to
the increase in temporary help revenues as compared to the
corresponding period in 1994.
Operating Expenses
------------------
Operating expenses increased approximately 34% for the six months
ended June 30, 1995 as compared to the corresponding period in
1994. The increase is mainly due to increase compensation and
compensation related costs associated with the increase in
revenues. Increases also resulted from additions to the sales force
and administrative areas primarily for the Long Island, New York
office opened October 1994 and recently started nursing and legal
divisions.
Net interest expense increased during 1995 due mainly to the
maintenance of a higher average loan balance as compared to 1994
partially offset by lower interest rates and interest income.
Operating Results
-----------------
Net income for the six month period ended June 30, 1995 was
approximately $281,000 or $.09 per common share as compared to net
income of approximately $257,000 or $.08 per common share in the
corresponding period for the prior year. The improvement in
operating results is primarily due to increased revenues partially
being offset by the increase in operating expenses.
Liquidity and Capital Resources
-------------------------------
Working capital at June 30, 1995 was approximately $2,408,000 as
compared to $2,201,000 at December 31, 1994. This increase can be
attributed mostly to revenue improvements and increased
receivables.
The Company has no material commitments for capital expenditures
during 1995. Management believes that the Company's credit
facility, working capital and internally generated funds are
sufficient to support current operations and any increase in
activity.
Inflation
---------
To date, the impact of inflation and changing prices on the
Company's business has been minimal. The Company charges its
customers fixed percentages of the salaries and wages of permanent
and temporary employees, which causes its fee income to increase
proportionately as salary and wages increase.
Page 9
<PAGE> 12
PART II -- OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security-Holders
---------------------------------------------------
The Company's annual meeting of Stockholders was held on
June 1, 1995 (the "Meeting"). At the Meeting, the Company's
stockholders voted upon and approved the election of three directors
and the ratification of Richard A. Eisner & Company as the
independent auditors of the Company for the fiscal year ending
December 31, 1995.
The holders of the Company's Common Stock voted on all
matters submitted for a vote at the Meeting. The number of votes
cast for, against or withheld, as well as the number of
abstentions, as to each such matter is set forth below:
ELECTION OF DIRECTORS
---------------------
<TABLE>
<CAPTION>
Common Stock Total
----------------------
For Withheld
--- --------
<S> <C> <C>
Martin Wolfson 2,582,907 207,511
Martin A. Fischer 2,586,407 204,011
Martin J. Simon 2,584,307 206,111
</TABLE>
RATIFICATION OF APPOINTMENT OF AUDITOR
--------------------------------------
<TABLE>
<CAPTION>
Common Stock Total
-----------------------------------
For Against Abstain
--- ------- -------
<S> <C> <C>
2,583,107 3,900 203,411
</TABLE>
ITEM 6. Exhibits and Reports on Form 8K:
-------------------------------
(a) Exhibits:
---------
27 Financial Data Schedules for the six months ended
June 30, 1995
(b) Reports:
None
No reports on Form 8K were filed by the Company during the quarter
ended June 30, 1995.
<PAGE> 13
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 thereunto duly authorized.
WINSTON RESOURCES, INC.
Date August 10, 1995
--------------- By /s/Seymour Kugler
-------------------------------
Seymour Kugler
Chairman of the Board
and President
Date August 10, 1995 By /s/David Frankel
--------------- -------------------------------
David Frankel
Principal Financial
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 118,000
<SECURITIES> 0
<RECEIVABLES> 5,495,000
<ALLOWANCES> 282,000
<INVENTORY> 0
<CURRENT-ASSETS> 5,527,000
<PP&E> 2,262,000
<DEPRECIATION> 1,963,000
<TOTAL-ASSETS> 7,391,000
<CURRENT-LIABILITIES> 3,119,000
<BONDS> 0
<COMMON> 29,000
0
0
<OTHER-SE> 3,308,000
<TOTAL-LIABILITY-AND-EQUITY> 7,391,000
<SALES> 15,123,000
<TOTAL-REVENUES> 15,123,000
<CGS> 0
<TOTAL-COSTS> 11,146,000
<OTHER-EXPENSES> 3,442,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 115,000
<INCOME-PRETAX> 420,000
<INCOME-TAX> 139,000
<INCOME-CONTINUING> 281,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 281,000
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
