SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-1
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 28, 1996
ESQUIRE COMMUNICATIONS LTD.
(Exact name of registrant as specified in charter)
DELAWARE 1-11782 13-3703760
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
216 EAST 45TH STREET, NEW YORK, NY 10017
- ---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 687-8010
(Former name or former address, if changed since last report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
(a) The appropriate financial statements of Seller are
attached hereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
ESQUIRE COMMUNICATIONS LTD.
Dated: April 15, 1997 By:/s/ _______________
Vasan Thatham
Chief Financial Officer
<PAGE>
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
FINANCIAL STATEMENTS AND INDEPENDENT
AUDITOR'S REPORT
December 31, 1994 and 1995
<PAGE>
CONTENTS
Page
Independent Auditors' Report 3
FINANCIAL STATEMENTS
Balance Sheets 4
Statements of Earnings and Retained Earnings 5
Statements of Cash Flows 6
Notes to Financial Statements 8
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
M & M REPORTING REFERRAL SERVICE, INC.
We have audited the accompanying balance sheets of M & M REPORTING REFERRAL
SERVICE, INC. dba M & M CERTIFIED COURT REPORTERS as of December 31, 1994 and
1995 and the related statements of earnings and retained earnings and cash flows
for the years ended December 31, 1994 and 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 audits 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 M & M REPORTING REFERRAL
SERVICE, INC. as of December 31, 1994 and 1995 and the results of its operations
and its cash flows for each of the two years in the period ended December 31,
1994 and 1995, in conformity with generally accepted accounting principles.
Sparks, Nelson & Jacobson
Santa Ana, Ca
February 23, 1996
<PAGE>
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
BALANCE SHEETS
December 31, 1994 and 1995
<TABLE>
<CAPTION>
ASSETS
1994 1995
CURRENT ASSETS
<S> <C> <C>
Cash $ 101,959 $ 253,708
Accounts receivable 870,796 889,023
Allowance for doubtful accounts (65,000) (100,000)
Prepaid expenses 10,130 12,132
----------- ----------
TOTAL CURRENT ASSETS 917,885 1,054,863
PROPERTY AND EQUIPMENT - NET (NOTE C) 79,971 86,383
NOTE RECEIVABLE - RELATED PARTY 24,687 16,927
---------- ----------
TOTAL ASSETS $1,022,543 $1,158,173
============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 147,722 179,968
Accrued expenses 41,407 68,139
Deferred income tax payable 15,000 15,000
Current portion of long-term
debt (NOTE - 3,565
----------- ----------
TOTAL CURRENT LIABILITIES 204,128 266,672
LONG-TERM DEBT (NOTE D) 20,921
STOCKHOLDERS' EQUITY
Common stock-authorized 1000 shares
of no par value; 600 shares issued 22,481 22,481
Retained earnings 1,061,686 1,113,852
Treasury stock - 300 shares at cost (265,752) (265,752)
------------- -----------
TOTAL STOCKHOLDERS' EQUITY 818,415 870,581
------------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,022,543 $1,158,174
============= ============
</TABLE>
The accompanying notes are an integral part of this statement.
<TABLE>
<CAPTION>
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
STATEMENTS OF EARNINGS AND RETAINED EARNINGS
For The Years Ended December 31, 1994 and 1995
1994 1995
<S> <C> <C>
REVENUES $4,868,916 $5,081,388
COSTS AND EXPENSES
Operating expenses 2,825,452 3,019,555
General and administrative expenses 831,813 856,764
Officers salaries 448,500 450,049
Depreciation and amortization 17,723 18,634
------------- -----------
4,123,488 4,345,002
EARNINGS FROM OPERATIONS 745,428 736,386
OTHER INCOME (EXPENSE)
Interest expense (641)
Interest income 3,977 4,588
Other 27,927 27,685
------------- -----------
31,904 31,632
------------- -----------
NET EARNINGS 777,332 768,018
RETAINED EARNINGS AT BEGINNING OF YEAR 1,059,999 1,061,686
DISTRIBUTIONS TO STOCKHOLDERS (775,645) (715,852)
------------- ------------
RETAINED EARNINGS AT END OF YEAR $1,061,686 $1,113,852
============= ============
</TABLE>
The accompanying notes are an integral part of this statement.
<TABLE>
<CAPTION>
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1994 and 1995
1994 1995
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net earnings $ 777,332 $ 768,018
Adjustments to reconcile net earnings to
net cash provided by operating activities - -
Depreciation 17,723 18,634
Increase in allowance for doubtful accounts 20,000 35,000
(Increase) decrease in assets
Accounts receivable 14,536 (18,227)
Prepaid expenses 13,330 (2,002)
Increase (decrease) in liabilities
Accounts payable (920) 32,246
Accrued liabilities (10,828) 26,732
------------ -----------
Net cash provided from operating
activities 831,173 860,401
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (22,409) -
Decrease in related party loan receivable 12,340 7,760
Distributions to stockholders (775,645) (715,852)
------------ -----------
Net cash used in investing activities (785,714) (708,092)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt - (560)
- (560)
------------ ------------
NET INCREASE IN CASH 45,459 151,749
BEGINNING CASH BALANCE 56,500 101,959
----------- ------------
ENDING CASH BALANCE $ 101,959 $253,708
=========== ============
</TABLE>
The accompanying notes are an integral part of this statement.
<TABLE>
<CAPTION>
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1994 and 1995
SUPPLEMENTAL SCHEDULE OF CASH
<S> <C> <C>
CASH PAID DURING THE PERIOD FOR:
Interest $ - $ 641
Income taxes $ 10,130 $ 7,465
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Capital lease obligation incurred for lease of equipment of $25,050.
</TABLE>
The accompanying notes are an integral part of this statement.
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
NOTES TO FINANCIAL STATEMENTS
December 31, 1994 and 1995
NOTE A - ORGANIZATION AND NATURE OF BUSINESS
M & M REPORTING REFERRAL SERVICE, INC. (Company) is a court reporting firm
providing printed and computerized transcripts and video recordings of testimony
from depositions to the legal profession and insurance industry, primarily in
the five county Southern California area.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Revenue Recognition
Revenues and the related direct costs of independent contractor court reporters
and transcribers are recognized when services rendered are billable, which is at
the time the final documents are transcribed and completed.
2. Property and Equipment
Property and equipment are recorded at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets. Leasehold
improvements are amortized over the shorter of the estimated useful life of the
assets or lease terms.
3. Income Taxes
Deferred state income tax is provided for accumulated temporary differences due
to basis differences for assets and liabilities for financial reporting and
state income tax purposes. The Company's temporary differences are due to
recognizing income on the cash method for tax return purposes and the accrual
method for financial reporting.
The federal income taxes on the net earnings are payable personally by the
stockholders, pursuant to an election under Subchapter S of the Internal Revenue
Code not to have the Company taxed as a corporation. The income taxes assumed
payable, had this election not been made, amount to $319,000 and $309,000 for
December 31, 1994 and 1995, respectively.
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
NOTES TO FINANCIAL STATEMENTS
December 31, 1994 and 1995
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT'D
4. Concentration of Credit Risk
The Company provides court reporting services primarily in the five county
Southern California area. Credit is extended to clients under normal industry
terms.
The Company maintains its cash in bank deposit accounts at high credit quality
financial institutions. The balances, at times, may exceed federally insured
limits. At December 31, 1994 and 1995, the Company exceeded the insured limit by
approximately $285,000 and $288,800, respectively.
NOTE C - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
December 31,
1994 1995
Office furniture and equipment $ 98,025 $ 123,071
Leasehold improvements 55,991 55,991
----------- ---------
154,016 179,062
Less accumulated depreciation 74,045 92,679
----------- ----------
$ 79,971 $ 86,383
=========== ==========
NOTE D - LONG-TERM DEBT
Capital lease obligation with monthly payments of $601 including interest at
15.4% matures November 2000.
Future minimum lease payments under capitalized lease obligations are as follows
at December 31, 1995:
1996 $ 7,200
1997 7,200
1998 7,200
1999 7,200
2000 6,600
-----------
35,400
Amount representing imputed
interest at 15.4% (10,914)
----------
$ 24,486
==========
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
NOTES TO FINANCIAL STATEMENTS
December 31, 1994 and 1995
NOTE D - LONG-TERM DEBT - CONT'D
At December 31, equipment under capitalized lease obligations was included on
the balance sheet under the caption of furniture totaled $25,036 with
accumulated depreciation of $895.
NOTE E - COMMITMENTS
The Company conducts its operations in facilities under month to month rental
agreements except for the Los Angeles office which runs through May 1996. The
rental for the Orange County office is with a related party.
The Company has various equipment leases expiring through 1998. The minimum
rental commitments under operating leases are as follows:
Year Ended December 31,
1996 $ 21,700
1997 17,800
1998 5,300
----------
Total minimum payments required $ 44,800
============
Rental expense for all operating leases for the years ending December 31, 1994
and 1995 is $132,200 and $116,400 respectively.
NOTE F - RELATED PARTY TRANSACTIONS
The Company leases their Orange County office from a partnership owned by the
stockholders. The rental is on a month to month basis at $7,500 per month. The
Company pays for normal maintenance and all improvements. Lease payments made to
the partnership for December 31, 1994 and 1995 were $90,000 for both years.
Interest and other income from stockholders was $11,500 for both December 31,
1994 and 1995.
Certain family members of the stockholders provide court reporting services to
the company, at gross billable rates, aggregating $296,500 and $309,500 for the
years ended December 31, 1994 and 1995 respectively.
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
NOTES TO FINANCIAL STATEMENTS
December 31, 1994 and 1995
NOTE G - SUBSEQUENT EVENTS
After year end the Company entered into a preliminary agreement with another
court reporting agency to sell substantially all of its net assets.
<PAGE>
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
UNAUDITED FINANCIAL STATEMENTS
September 30, 1995 and 1996
CONTENTS
Page
FINANCIAL STATEMENTS
Balance Sheets 4
Statements of Earnings and Retained Earnings 5
Statements of Cash Flows 6
Notes to Financial Statements 8
<TABLE>
<CAPTION>
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
BALANCE SHEETS
September 30, 1995 and 1996
S ASSETS
1995 1996
CURRENT ASSETS
<S> <C> <C>
Cash $ 222,518 $ 182,602
Accounts receivable 997,705 898,202
Allowance for doubtful accounts (100,000) (57,500)
Prepaid expenses 9,099 23,394
TOTAL CURRENT ASSETS 1,129,322 1,046,698
PROPERTY AND EQUIPMENT - NET (NOTE C) 64,026 72,652
NOTE RECEIVABLE RELATED PARTY 18,216 7,541
TOTAL ASSETS $1,211,564 $1,126,891
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 195,767 149,661
Accrued expenses 34,197 23,791
Purchase advance - 100,000
Deferred income tax payable 15,000 15,000
Current portion of debt (NOTE D) - 3,565
TOTAL CURRENT LIABILITIES 244,964 292,017
LONG-TERM DEBT (NOTE D) - 18,234
STOCKHOLDERS' EQUITY
Common stock-authorized 1000 shares
of no par value; 600 shares
issued 300 shares outstanding 22,481 22,481
Treasury stock-300 shares at cost (265,752) (265,752)
Retained earnings 1,209,871 1,059,911
TOTAL STOCKHOLDERS' EQUITY 966,600 816,640
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,211,564 $1,126,891
</TABLE>
The accompanying notes are an integral part of these statements.
See Accountants' Compilation Report
<PAGE>
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
STATEMENTS OF EARNINGS AND RETAINED EARNINGS
Nine Months Ended September 30, 1995 and 1996
1995 1996
REVENUES $3,980,867 $3,582,155
COSTS AND EXPENSES
Operating expenses 2,370,915 1,994,674
General and administrative expenses 667,320 641,461
Officers salaries 337,549 337,500
Depreciation and amortization 13,273 16,221
3,389,057 2,989,856
EARNINGS FROM OPERATIONS 591,810 592,299
OTHER INCOME (EXPENSE)
Interest expense - (2,718)
Interest income 3,331 2,720
Other 14,895 12,254
18,226 12,256
NET EARNINGS 610,036 604,555
RETAINED EARNINGS AT BEGINNING OF PERIOD 1,061,686 1,113,852
DISTRIBUTIONS TO STOCKHOLDERS (461,851) (658,496)
RETAINED EARNINGS AT END OF PERIOD $1,209,871 $1,059,911
The accompanying notes are an integral part of these statements.
See Accountants' Compilation Report
<PAGE>
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1995 and 1996
1995 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 610,036 $ 604,555
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities - -
Depreciation 13,273 16,221
Increase (Decrease) in allowance for
doubtful accounts 35,000 (42,500)
(Increase) decrease in assets
Accounts receivable (126,909) (9,179)
Prepaid expenses 1,031 (7,611)
Increase (decrease) in liabilities
Accounts payable 48,046 (30,307)
Accrued liabilities (7,210) (44,348)
Net cash provided from operating
activities 573,267 486,831
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment - (2,491)
Decrease in related party loan receivable 6,472 8,785
(Increase) decrease in deposits 2,672 (3,049)
Distributions to stockholders (461,852) (658,495)
Net cash used in investing
activities (452,708) (655,250)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase advance - 100,000
Principal payments on long-term debt - (2,687)
- 97,313
NET INCREASE (DECREASE) IN CASH 120,559 (71,106)
BEGINNING CASH BALANCE 101,959 253,708
ENDING CASH BALANCE $ 222,518 $182,602
The accompanying notes are an integral part of these statements.
See Accountants' Compilation Report
<PAGE>
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1995 and 1996
SUPPLEMENTAL SCHEDULE OF CASH
CASH PAID DURING THE PERIOD FOR:
Interest $ - $ 2,718
Income taxes $ 9,000 $ 16,500
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Capital lease obligation incurred for lease of equipment of $25,050.
The accompanying notes are an integral part of these statements.
See Accountants' Compilation Report
<PAGE>
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
NOTES TO FINANCIAL STATEMENTS
September 30, 1995 and 1996
NOTE A - ORGANIZATION AND NATURE OF BUSINESS
M & M REPORTING REFERRAL SERVICE, INC. (Company) is a court
reporting firm providing printed and computerized transcripts and
video recordings of testimony from depositions to the legal profession
and insurance industry, primarily in the five county Southern
California area. Credit is extended to clients under normal industry
terms.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Revenue Recognition
Revenues and the related direct costs of independent contractor
court reporters and transcribers are recognized when services rendered
are billable, which is at the time the final documents are transcribed
and completed.
2. Property and Equipment
Property and equipment are recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful
lives of the assets. Leasehold improvements are amortized over the
shorter of the estimated useful life of the assets or lease terms.
3. Income Taxes
Deferred state income tax is provided for accumulated temporary
differences due to basis differences for assets and liabilities for
financial reporting and state income tax purposes. The Company's
temporary differences are due to recognizing income on the cash method
for tax return purposes and the accrual method for financial
reporting.
The federal income taxes on the net earnings are payable
personally by the stockholders, pursuant to an election under
Subchapter S of the Internal Revenue Code not to have the Company
taxed as a corporation. The income taxes assumed payable, had this
election not been made, amount to $250,000 and $248,000 for September
30, 1995 and 1996, respectively.
<PAGE>
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
NOTES TO FINANCIAL STATEMENTS
September 30, 1995 and 1996
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT'D
4. Concentration of Credit Risk
The Company provides court reporting services primarily in the
five county Southern California area. Credit is extended to client
under normal industry terms.
The Company maintains its cash in bank deposit accounts at high
credit quality financial institutions. The balances, at times, may
exceed federally insured limits. At September 30, 1995 and 1996, the
Company exceeded the insured limit.
NOTE C - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
September 30,
1995 1996
Office furniture and equipment $ 95,353 $ 125,561
Leasehold improvements 55,991 55,991
151,344 181,552
Less accumulated depreciation 87,318 108,900
$ 64,026 $ 72,652
NOTE D - LONG-TERM DEBT
Capital lease obligation with monthly payments of $601 including
interest at 15.4% matures November 2000.
Future minimum lease payments under capitalized lease obligations
are as follows at September 30, 1996:
1996 $ 1,800
1997 7,200
1998 7,200
1999 7,200
2000 6,600
30,000
Amount representing imputed
interest at 15.4% (8,201)
$ 21,799
<PAGE>
M & M REPORTING REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
NOTES TO FINANCIAL STATEMENTS
September 30, 1995 and 1996
NOTE D - LONG-TERM DEBT - CONT'D
At September 30, 1996, equipment under capitalized lease
obligations was included on the balance sheet under the caption of
furniture totaled $25,036 with accumulated depreciation of $2,900.
NOTE E - COMMITMENTS
The Company conducts its operations in facilities under month to
month rental agreements except for the Los Angeles office which runs
through May 1996. The rental for the Orange County office is with a
related party.
The Company has various equipment leases expiring through 1998.
The minimum rental commitments under operating leases are as follows:
Year Ended December 31,
1996 $ 5,400
1997 17,800
1998 5,300
Total minimum payments required $ 28,500
Rental expense for all operating leases for the nine months
ending September 30, 1995 and 1996 is $99,000 and $118,900
respectively.
NOTE F - RELATED PARTY TRANSACTIONS
The Company leases their Orange County office from a partnership
owned by the stockholders. The rental is on a month to month basis at
$7,500 per month. The Company pays for normal maintenance and all
improvements. Lease payments made to the partnership for the nine
months ended September 30, 1995 and 1996 were $67,500 for both
periods. Interest and other income from stockholders was $7,500 for
both September 30, 1995 and 1996.
Certain family members of the stockholders provide court
reporting services to the company, at gross billable rates,
aggregating $232,000 and $265,500 for the nine months ended September
30, 1995 and 1996 respectively.
M & M REFERRAL SERVICE, INC.
dba
M & M CERTIFIED COURT REPORTERS
NOTES TO FINANCIAL STATEMENTS
September 30, 1995 and 1996
NOTE G - ASSET SALE AGREEMENT
During the period ending September 30, 1996 the Company entered
into an asset sale agreement with another court reporting agency to
sell substantially all of its net assets. The Company received an
advance of $100,000 of the purchase price.
NOTE H - SUBSEQUENT EVENTS
Subsequent to September 30, 1996 the Company sold substantially
all of its net assets to another court reporting company. The Company
will not continue in operations as a separate entity.
