UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 23, 1996
Commission file number: 1-11782
ESQUIRE COMMUNICATIONS LTD.
( Exact name of Small Business issuer as specified in its charter)
Delaware 13-3703760
(State or other jurisdiction (I.R.S Employer
of incorporation or organization) Identification No.)
216 East 45th Street, New York, New York 10017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (212) 687-8010
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(Former name, former address and former fiscal year, if changed from last
report)
<PAGE>
Item 7. Financial Statements, Pro Forma Information and Exhibits
ESQUIRE COMMUNICATIONS LTD. AND
M&M REPORTING REFERRAL SERVICE, INC.
PRO FORMA COMBINED FINANCIAL INFORMATION
(UNAUDITED)
BASIS OF COMBINATION-PROFORMA
The accompanying pro forma combined statement of operations have been
derived from Esquire Communications Ltd's ("ESQ.COM") statements of operations
for year ended December 31, 1995 and the nine-month period ended September 30,
1996. Adjustments have been made to such information to give effect to the
following transactions and events as if each had occurred as of the beginning of
the period covered by these pro forma combined statements of operations:
A. ESQ.COM's acquisition of M&M Reporting Referral Service, Inc.("M&M")
on October 28, 1996.
B. ESQ.COM's private placement of Series A Convertible Preferred Stock
which closed on October 23, 1996.
C. ESQ.COM's purchase in November 1996, of 433,500 shares of its
outstanding common stock.
The accompanying unaudited proforma combined balance sheet gives
effect to the above transactions as if all of such events occurred on September
30, 1996.
The pro forma combined statements of operations and pro forma combined
balance sheet have been adjusted on a proforma basis for the above transactions
and assumptions (pro forma adjustments) discussed in the accompanying notes.
The accompanying pro forma financial information does not purport to
represent what ESQ.COM's results of operations or financial condition would have
been had such transactions in fact occurred at beginning of the periods
presented or to project ESQ.COM's results of operations or financial position in
or for any future periods.
<PAGE>
ESQUIRE COMMUNICATIONS LTD. AND
M&M REPORTING REFERRAL SERVICE, INC.
NOTES TO PRO FORMA COMBINED BALANCE SHEET AS OF SEPTEMBER 30, 1996
(UNAUDITED)
The pro forma balance sheet adjustments include those necessary to
record ESQ.COM's acquisition of M&M ( including related adjustments required
under purchase accounting), the receipt and use of proceeds from the private
placement and the purchase of ESQ.COM's outstanding stock.
PRO FORMA ADJUSTMENTS
(1) To record the net proceeds from the private placement of $6.7 million
( Gross $7.5 million and estimated related cost of $.8 million) and
use of $1.3 million to purchase 433,500 shares of the company's
outstanding stock at $3.00 per share and assumed use of $2.2 million
to reduce the debt level.
(2) To record the acquisition of M&M, for an aggregate consideration,
inclusive of estimated associated costs, of approximately $6 million
consisting of 132,258 shares of common stock of ESQ.COM ( with a
recorded value of$309,000 ), cash of $ 2.9 million and subordinated
promissory notes in the aggregate amount of $2.7 million.
Approximately $ 5.4 million of such preliminary purchase price have
been allocated to goodwill.
(3) To close out M&M's equity accounts and adjust for assets and
liabilities of M&M that were not acquired.
<PAGE>
<TABLE>
ESQUIRE COMUNICATIONS LTD. AND
M&M REPORTING REFERRAL SERVICE, INC. PRO FORMA COMBINED BALANCE SHEET
(UNAUDITED)
September 30, 1996
(In Thousands Except Share Data)
<CAPTION>
Historical Pro Forma
---------------------- ----------------------------------------
ESQ.COM M&M Adjustments Adjustments Combined
----------------------- ----------------------------------------
ASSETS
Current Assets:
<S> <C> <C> <C> <C> <C> <C>
Cash $22 $183 (2&3) ($3,127(1) $3,199 $277
Accounts receivable, less allowance 4,743 841 (3) (200) 5,384
Prepaid and other current assets 289 23 (3) (23) 289
------- ------ ------- ------ -------
Total current assets 5,054 1,047 (3,350) 3,199 5,950
Property and equipment, net 1,709 73 1,782
Other assets:
Costs in excess of fair value of net
tangible assets of acquired businesses, net 13,128 (2) 5,448 18,576
Other assets, net 985 7 (3) (7) 985
------- ------ ------- ------
14,113 7 5,441 19,561
------- ------ ------- ------
$20,876 $1,127 $2,091 $3,199 $27,293
======= ====== ======= ====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $1,161 $150 $1,311
Accrued expenses and other current liabilities 667 138 (3) (114) 691
Current portion of long term debt 4,632 4 (2) 543 (1) (2,200) 2,979
------ ----- ------ ------- ------
Total current liabilities 6,460 292 429 (2,200) 4,981
Long-term debt 6,789 18 (2) 2,170 8,977
Other liabilities 293 293
Stockholders' equity:
Common Stock 41 22 (2&3) (21) 42
Additional paid-in capital 7,703 (2) 308 8,011
Treasury stock (265) (3) 265 (1,301)(1) (1,301)
Preferred Stock-$.01 par value, 7,500 issued 6,700(1) 6,700
Retained earnings (deficit) (410) 1,060 (1,060) (410)
------- ------ ------- ------ -------
7,334 817 (508) 5,399 13,042
-------- ------- ------- ------ -------
$20,876 $1,127 $2,091 $3,199 $27,293
======== ======= ====== ====== ========
</TABLE>
<PAGE>
ESQUIRE COMMUNICATIONS LTD. AND
M&M REPORTING REFERRAL SERVICE, INC.
NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
For the Year Ended December 31, 1995
BASIS OF COMBINATION OF HISTORICAL FINANCIAL INFORMATION
ESQ.COM's operating results represent historical results of operations
for the year ended December 31, 1995. See ESQ.COM's 1995 financial statements
previously filed with its annual report on form 10-KSB. M&M includes historical
results of operations for the year ended December 31, 1995.
PROFORMA ADJUSTMENTS
(4) Expenses
General and administrative:
To record retroactively the estimated salary reduction to be realized
with respect to the negotiated employment agreement entered into with
the principals of M&M.
Depreciation and amortization:
To record retroactively amortization of goodwill arising from M&M
acquisition.
Interest expense:
To record retroactively the decreased interest cost as a result of the
assumed debt reduction with the proceeds of the private placement and
net of the interest cost arising from borrowings to finance the
acquisition of M&M.
Other income:
To retroactively adjust M&M's income from assets that were not
acquired by ESQ.COM.
Provision for taxes:
To record income tax on the pro forma income at effective statutory
rates with assumed termination of Subchapter S Corporation status of
M&M.
Preferred dividend requirements:
To record retroactively the dividend payable on the Series A
Convertible Preferred Stock.
<PAGE>
ESQUIRE COMMUNICATIONS LTD. AND
M&M REPORTING REFERRAL SERVICE, INC.
NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
For the Year Ended December 31, 1995
PROFORMA ADJUSTMENTS( CONTINUED)
Pro Forma Per Share Computation:
The computation of proforma net income per share of common share
amounts for the year ended December 31, 1995 have in determining the
average number of common shares outstanding, given retroactive effect
for the following transactions:
132,258 shares of common stock of ESQ.COM assumed to be issued in the
acquisition of M&M.
433,500 shares of common stock of ESQ.COM assumed to be acquired by
ESQ.COM.
<PAGE>
<TABLE>
ESQUIRE COMMUNICATIONS LTD. AND
M&M REPORTING REFERRAL SERVICE, INC.
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE YEAR ENDED December 31, 1995
(In Thousands Except Per Share Data)
<CAPTION>
Historical Pro Forma
-------------------- -----------------------
ESQ.COM M&M Adjustments Combined
-------------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Revenues $20,692 $5,081 $25,773
Costs and expenses:
Operating expenses 11,660 3,019 14,679
General and administrative expenses 6,120 1,307 (4) (381) 7,046
Depreciation and amortization 1,025 19 (4) 281 1,262
-------- ------- ------ ---------
18,805 4,345 (163) 22,987
------- ------- ------ ---------
Income from operations 1,887 736 163 2,786
Other income (expense)
Interest expense (1,069) (4) (1,069)
Interest and other income 10 32 (4) (32) 10
------- ------ ------ --------
(1,059) 32 (32) (1,059)
------- ------ ------ --------
Income before provision for income taxes 828 768 131 1,727
Provision for taxes 549 (4) 360 909
------- ------ ------ --------
Net income $279 $768 ($229) $818
======= ====== ====== ========
Preferred dividend requirements (4) 450 450
Net income applicable to
common stockholders $279 $768 ($679) $368
======= ======= ======= ========
Pro forma net income per share $0.10
=======
Pro forma weighted average common
shares outstanding 3,826
=======
</TABLE>
<PAGE>
ESQUIRE COMMUNICATIONS LTD. AND
M&M REPORTING REFERRAL SERVICE, INC.
NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
For the Nine Months September 30, 1996
BASIS OF COMBINATION OF HISTORICAL FINANCIAL INFORMATION
ESQ.COM's operating results represent historical results of operations
for the nine months ended September 30, 1996. See ESQ.COM's September 30, 1996
financial statements previously filed with its form 10-QSB. M&M includes
historical results of operations for the nine months ended September 30, 1996.
PROFORMA ADJUSTMENTS
(5) Expenses
General and administrative:
To record retroactively the estimated salary reduction to be realized
with respect to the negotiated employment agreement entered into with
the principals of M&M.
Depreciation and amortization:
To record retroactively amortization of goodwill arising from M&M
acquisition.
Interest expense:
To record retroactively the decreased interest cost as a result of the
assumed debt reduction with the proceeds of the private placement and
net of the interest cost arising from borrowings to finance the
acquisition of M&M.
Other income:
To retroactively adjust M&M's income from assets that were not
acquired by ESQ.COM.
Provision for taxes:
To record income tax on the pro forma income at effective statutory
rates with assumed termination of Subchapter S Corporation status of
M&M.
Preferred dividend requirements:
To record retroactively the dividend payable on the Series A
Convertible Preferred Stock.
<PAGE>
ESQUIRE COMMUNICATIONS LTD. AND
M&M REPORTING REFERRAL SERVICE, INC.
NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
For the Nine Months September 30, 1996
PROFORMA ADJUSTMENTS( CONTINUED)
Pro Forma Per Share Computation:
The computation of proforma net loss per share of common share amounts
for the nine months ended September 30, 1996 have in determining the
average number of common shares outstanding, given retroactive effect
for the following transactions:
132,258 shares of common stock of ESQ.COM assumed to be issued in the
acquisition of M&M.
433,500 shares of common stock of ESQ.COM assumed to be acquired by
ESQ.COM.
<PAGE>
<TABLE>
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE YEAR ENDED September 30, 1996
(In Thousands Except Per Share Data)
<CAPTION>
Historical Pro Forma
-------------------- -----------------------
ESQ.COM M&M Adjustments Combined
-------------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Revenues $17,391 $3,582 $20,973
Costs and expenses:
Operating expenses 9,778 1,995 11,773
General and administrative expenses 5,769 979 (5) (286) 6,462
Depreciation and amortization 811 16 (5) 163 990
-------- ------- ------ ---------
16,358 2,990 (123) 19,225
Income from operations 1,033 592 123 1,748
Other income (expense)
Interest expense (824) (3) (5) (37) (864)
Interest and other income 6 15 (5) (15) 6
------- ------ ------ --------
(818) 12 (52) (858)
------- ------ ------ --------
Income before provision for income taxes 215 604 71 890
Provision for taxes 281 (5) 300 581
------- ------ ------ --------
Net income ($66) $604 ($229) $309
======= ====== ====== ========
Preferred dividend requirements (5) 338 338
Net income applicable to
common stockholders ($66) $604 ($567) ($29)
======= ======= ======= ========
Pro forma net (loss) per share ($0.01)
=======
Pro forma weighted average common
shares outstanding 3,826
=======
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
December 19, 1996
By:/s/ Malcolm L. Elvey
Malcolm L. Elvey
Chairman of the Board and
Chief Executive Officer
By:/s/ Vasan Thatham
Vasan Thatham
Principal Accounting Officer
