SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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 33-53250-A
Workforce Systems Corp.
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(Exact name of small business issuer as specified in its charter)
Florida
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(State or other jurisdiction of incorporation or organization)
65-0353816
--------------------------------
(IRS Employer Identification No.)
269 Cusick Road, Suite C-2, Alcoa, TN 37701
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(Address of principal executive offices)
615-681-6034
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(Issuer's telephone number)
not applicable
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(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( ).
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. As of November 13, 1996 the
registrant had issued and outstanding 2,493,934 shares of common stock.
Transitional Small Business Disclosure Format (check one);
Yes ( ) No (x)
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
INDEX TO FINANCIAL STATEMENTS
Page Number
-----------
Consolidated Balance Sheets at September 30, 1996 (Unaudited)
and June 30, 1996 (Audited) 2
Consolidated Statements of Operations for the three months ended
September 30, 1996 (Unaudited) and 1995 (Unaudited) 4
Consolidated Statements of Cash Flows for the three months ended
September 30, 1996 (Unaudited) and 1995 (Unaudited) 5
Consolidated Statements of Stockholders' Equity for the three month
period ended September 30, 1996 (Unaudited) 6
Notes to the Unaudited Consolidated Financial Statements 7
1
<PAGE>
WORKFORCE SYSTEMS CORP.
CONSOLIDATED BALANCE SHEETS
---------------------------
September 30, June 30,
1996 1996
------------ ------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 201,069 $ 938,487
Receivables:
Trade accounts receivables, no allowance
necessary 649,829 633,188
Inventory 1,758,823 1,412,896
Prepaid expenses 674,226 711,510
Deferred income tax assets 115,000 115,670
------------ ------------
Total Current Assets 3,398,947 3,811,751
PROPERTY, PLANT AND EQUIPMENT
Land 156,503 156,503
Building and improvements 1,381,460 1,380,422
Machinery and equipment 1,697,035 1,525,921
Mineral exploration 679,484 700,000
Autos and trucks 181,003 146,428
Accumulated depreciation (160,356) (132,856)
------------ ------------
Total Property, Plant and Equipment 3,935,129 3,776,418
OTHER ASSETS
Intangibles, net of accumulated amortization
of $249,648 and $209,658, respectively 4,546,240 4,344,771
$ 11,880,316 $ 11,932,940
============ ============
2
<PAGE>
WORKFORCE SYSTEMS CORP.
CONSOLIDATED BALANCE SHEETS
---------------------------
September 30, June 30,
1996 1996
----------- -----------
(unaudited)
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts Payable $ 338,356 $ 390,895
Accrued expenses 72,371 113,437
Accrued federal & state income taxes 325,000 253,261
Deferred income tax liability 326,780 326,780
Current portion of long term debt 275,000 254,159
----------- -----------
Total Current Liabilities 1,337,507 1,338,532
NON CURRENT DEFERRED INCOME TAXES 297,475 342,473
LONG TERM DEBT, less current portion 491,668 539,207
RELATED PARTY NOTE PAYABLE -- 132,667
STOCKHOLDER'S EQUITY
Preferred stock, $.001 par value, 2,000,000
shares authorized,
30 shares of Series A issued and outstanding
30,000 shares of Series C issued and
and outstanding
1,000,000 shares of Series D issued
and outstanding 1,100 1,100
Common stock, $.001 par value, 10,000,000 shares
authorized, 2,420,836 shares issued 2,421 2,421
and outstanding
Paid in capital 8,568,941 8,568,941
Retained earnings 1,181,204 1,007,599
----------- -----------
Total Stockholders' Equity 9,753,666 9,580,061
----------- -----------
$11,880,316 $11,932,940
=========== ===========
3
<PAGE>
WORKFORCE SYSTEMS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
For the three
months ended
September 30,
-----------------------
1996 1995
---------- ----------
(unaudited) (unaudited)
Revenues earned $1,157,371 $1,104,439
Cost of revenues earned 673,797 618,372
---------- ----------
Gross Profit 483,574 486,067
Selling, general and administrative expenses 222,469 231,724
---------- ----------
Income from operations 261,105 254,343
Income tax provision 87,500 90,000
---------- ----------
Net Income $ 173,605 $ 164,343
========== ==========
Earnings per common and common equivalent share:
Net income before payment of dividends $ 173,605 $ 164,343
Dividends paid 0 19,317
---------- ----------
Net income available to common shareholders $ 173,605 $ 145,026
========== ==========
Earnings Per Share:
Net Income $ .07 $ .10
Average weighted shares outstanding 2,410,836 1,503,724
4
<PAGE>
<TABLE>
<CAPTION>
WORKFORCE SYSTEMS CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
for the three months ended September 30, 1996
(unaudited)
Preferred stock Common stock
$.001 par value $.001 par value
2,000,000 shares 10,000,000 shares
authorized authorized
1,030,030 2,420,836 Additional Total
shares issued shares issued Paid-In Retained Stockholders'
and outstanding and outstanding Capital Earnings Equity
--------------- --------------- ------- -------- ------
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1996 $ 1,100 $ 2,421 $8,568,941 $1,007,599 $9,580,061
Net income for the three months
ended September 30, 1996 -- -- -- 173,605 173,605
---------- ---------- ---------- ---------- ----------
Balance, September 30, 1996 $ 1,100 $ 2,421 $8,568,941 $1,181,204 $9,753,666
========== ========== ========== ========== ==========
</TABLE>
5
<PAGE>
WORKFORCE SYSTEMS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the three For the three
months ended months ended
September 30, September 30,
1996 1995
--------- ---------
(unaudited) (unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 173,605 $ 164,343
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization and depreciation 67,500 67,511
Changes in operating assets and liabilities:
(Increase) in receivables (16,641) (49,031)
(Increase) decrease in prepaid expense 37,284 8,979
(Increase) in inventory (345,927) (146,885)
Decrease in deferred income tax asset 670 --
(Decrease) in accounts payable (52,539) (30,279)
Increase (decrease) in accrued federal & state taxes 71,739 (13,274)
Increase (decrease) in miscellaneous liabilities (41,066) (72,079)
Increase in current portion of long term debt 20,841 --
--------- ---------
Net Cash Provided (Used) by Operating Activities (84,534) (70,715)
INVESTING ACTIVITIES:
(Increase) in start-up costs (201,469) --
(Increase) in property, plant and equipment (226,211) (184,934)
--------- ---------
Net Cash Provided (Used) by Investing Activities (427,680) (184,934)
FINANCING ACTIVITIES:
(Decrease) in long term debt (47,539) (19,229)
(Decrease) in non-current deferred income taxes (44,998) --
Dividends paid -- (19,317)
Increase (Decrease) in related party note payable (132,667) 273,676
--------- ---------
Net Cash Provided (Used) by Financing Activities (225,204) 235,130
--------- ---------
Net (Decrease) in Cash and Cash Equivalents (737,418) (20,519)
Cash and Cash Equivalents, Beginning of Period 938,487 91,652
--------- ---------
Cash and Cash Equivalents, End of Period $ 201,069 $ 71,133
========= =========
</TABLE>
6
<PAGE>
WORKFORCE SYSTEMS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 1996
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instruction of Form 10-QSB and Article 310 of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended September 30,
1996 are not necessarily indicative of the results that may be expected for the
year ended June 30, 1997.
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual report on Form 10-KSB for
the year ended June 30, 1996 as filed with the Securities and Exchange
Commission.
7
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Results of Operations
Workforce Systems Corp. (the "Company") is a diversified company with
operations in three business segments: (1) manufacturing and industrial
fabrication, (2) staffing; and (3) consumer products. The following table sets
forth the percentage of revenues contributed to the total revenues reported by
the Company for each of the three months ended September 30, 1996 and 1995:
Three Months Ended September 30,
1996 1995
----------- -----------
(unaudited) (unaudited)
Manufacturing and Industrial
Fabrication 68% 56%
Staffing 19% 17%
Consumer Products 13% 27%
---- ----
100% 100%
The foregoing results are consistent with those disclosed in prior periods
and reflect both an increase in revenues at the manufacturing and industrial
fabrication division as a result of the expansion of that division through
additional product lines and opening of the new Dalton, Georgia location as well
as the decrease in revenues at the consumer products division which results from
the maturity of one product (the ThawMaster family of thawing trays) and the
infancy in the life span of that division's newest product, Mr. Food's
AlloFresh, for which introduction at the retail level was commenced in the first
quarter of Fiscal 1997. For the balance of Fiscal 1997 management of the Company
believes the manufacturing and industrial fabrication division as well as the
staffing division will continue to increase revenues based upon their current
plans of operations. Further, management of the Company believes, although there
can be no assurances, that as the retail roll-out of Mr. Food's AlloFresh
continues to progress, the consumer products division will continue to increase
its revenues as well.
Liquidity and Capital Resources
The decrease in working capital at September 30, 1996 versus June 30, 1996
is primarily the result of the additional costs incurred by the consumer
products division with respect to its newest product, Mr. Food's AlloFresh, as
well as the acquisition of additional property, plant and equipment by the
8
<PAGE>
manufacturing division. In order to pursue the Company's plan of operations for
the balance of Fiscal 1997, it will be necessary for the Company to raise
additional working capital. In this vein, and as previously disclosed, in July
1996 the Company engaged Laidlaw Equities, Inc., an NASD member firm, to serve
as its investment banker. It is presently anticipated that management will seek
to raise additional capital through a public offering of its securities during
Fiscal 1997. There are no assurances, however, that management will definitively
determine to proceed with such offering or that the Company will be successful
in concluding such an offering. In such event, the continued growth of the
Company would be limited to the internal availability of working capital. The
Company's inventory, accounts receivable and a substantial portion of its
property, plant and equipment are unencumbered and, accordingly, would provide
additional sources of internal working capital should the Company elect to enter
into an asset based lending arrangement.
9
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27 - Financial Data Schedule (Electronic filing only).
(b) None.
10
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Workforce Systems Corp,
a Florida corporation
Date: November 19, 1996 By: /s/ Ella Boutwell Chesnutt
--------------------------
Ella Boutwell Chesnutt,
President
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF WORKFORCE SYSTEMS CORP. FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 201,069
<SECURITIES> 0
<RECEIVABLES> 649,829
<ALLOWANCES> 0
<INVENTORY> 1,758,823
<CURRENT-ASSETS> 3,398,947
<PP&E> 4,095,485
<DEPRECIATION> 160,356
<TOTAL-ASSETS> 11,830,316
<CURRENT-LIABILITIES> 1,337,507
<BONDS> 0
0
1,100
<COMMON> 2,421
<OTHER-SE> 9,750,145
<TOTAL-LIABILITY-AND-EQUITY> 11,880,316
<SALES> 1,157,351
<TOTAL-REVENUES> 1,157,351
<CGS> 673,797
<TOTAL-COSTS> 673,797
<OTHER-EXPENSES> 222,469
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 261,105
<INCOME-TAX> 87,500
<INCOME-CONTINUING> 173,605
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 173,605
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
