(COMTEX)B: OneSource Reports a 2002 Operating Profit for the Year =1
B: OneSource Reports a 2002 Operating Profit for the Year =1
SCOTTSDALE, Ariz., Apr 22, 2003 (PRIMEZONE via COMTEX) -- OneSource
Technologies, Inc., (OTCBB:OSRC) reported consolidated revenues of $2.9 million
for the year ended December 31, 2001, a 7% increase over year-end 2001 revenues
of $2.8 million. Operating Profit and Net Profit of $193 thousand (less than
$0.00 per share) and $16 thousand (less than $0.00 per share) respectively were
also reported for the year-ended December 31, 2002 compared to Operating Losses
and Net Losses of $556 thousand ($0.03 per share) and $1.5 million ($0.07 per
share) respectively for the year ended December 31, 2001.
"Annual 2002 results now confirm the Company has turned the corner and returned
to profitability", said Michael Hirschey, CEO of the Company. "Operational
problems in the Company's maintenance and installation division have been
rectified and the Company's supplies distribution division continued to
contribute positive cash flow and profits for the year," continued Hirschey.
"These results also reflect the constructive effects of restructuring and
realignment changes management has implemented to forge a solid foundation for
the future," added Hirschey. "We will continue to enhance these improved
infrastructure, management and operational processes in 2003 so the Company can
regain the momentum it enjoyed in the late '90s ", concluded Hirschey.
About OneSource
OneSource is engaged in three closely related and complimentary lines of IT and
business equipment support services and products, 1) equipment maintenance
services, 2) equipment installation services, and 3) value added equipment
supplies distribution. OneSource is in the technology equipment maintenance and
service industry and is the inventor of the unique OneSource Flat-Rate Blanket
Maintenance System(TM). This patent pending program provides customers with a
Single Source for all general office, computer and peripheral and industry
specific equipment technology maintenance and installation services.
OneSource's Cartridge Care division provides remanufactured toner cartridges in
the south and mountain west and is the supplier of choice for a number of
Fortune 1000 companies in those regions. OneSource has realigned this division
and invested in eCommerce initiatives to stage the division for substantial
expansion over the next two years to enable Cartridge Care to extend its
reputation beyond its southwestern regional roots.
This press release may contain forward-looking information within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 as amended, and is subject to the safe harbors created by
those sections.
Independent Auditor's Report
To the Stockholders and Board of Directors of OneSource Technologies, Inc.:
We have audited the accompanying consolidated balance sheet of OneSource
Technologies, Inc. as of December 31, 2002 and related consolidated statements
of operations, stockholders' deficit and cash flows for each of the two years in
the period ended December 31, 2002. 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 auditing standards generally accepted
in the United States. 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 our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
OneSource Technologies, Inc. as of December 31, 2002, and the consolidated
results of its operations and cash flows for each of the two years in the period
ended December 31, 2002, in conformity with accounting principles generally
accepted in the United States.
/s/ Epstein, Weber & Conover, P.L.C.
Scottsdale, Arizona
February 6, 2003
ONESOURCE TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2001
--------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash $ 75,433
Accounts receivable 311,995
Inventories 209,045
Other current assets 24,052
-----------
Total current assets 620,525
PROPERTY AND EQUIPMENT, net of
accumulated depreciation $158,529 210,918
GOODWILL 235,074
DEFERRED INCOME TAXES 140,187
OTHER ASSETS 1,323
===========
TOTAL ASSETS $ 1,208,027
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable 356,159
Accrued expenses and other liabilities 326,228
Deferred revenue 139,626
Bank lines of credit 50,000
Current portion capital leases and
installment notes 9,212
Current portion of debt 882,170
-----------
Total current liabilities 1,763,395
INSTALLMENT NOTES - LONG-TERM PORTION 11,469
-----------
Total liabilities 1,774,864
-----------
STOCKHOLDERS' DEFICIT
Preferred Stock, $.001 par value,
1,000,000 shares authorized,
none issued
Common Stock, $.001 par value,
50,000,000 shares authorized,
26,853,317 issued and outstanding
at December 31, 2001 24,963
Paid in capital 2,685,004
Accumulated deficit (3,276,804)
-----------
(566,837)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT $ 1,208,027
===========
ONESOURCE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31 2002 & 2001
---------------------------------------------------------------------
2002 2001
----------- -----------
REVENUE, net $ 2,958,871 $ 2,774,947
COST OF REVENUE 1,928,071 1,854,820
----------- -----------
Gross Profit 1,030,800 920,127
GENERAL AND ADMINISTRATIVE EXPENSES 816,953 1,319,877
SELLING AND MARKETING EXPENSES 21,923 156,396
----------- -----------
Operating Income (Loss) 191,924 (556,146)
OTHER INCOME (EXPENSE):
Interest expense (140,883) (158,921)
Other income (expense) (35,427) 5,782
----------- -----------
Total other expense (176,310) (153,139)
----------- -----------
INCOME(LOSS) BEFORE
EXTRAORDINARY ITEMS,
DISCONTINUED OPERATIONS AND
INCOME TAXES 15,614 (709,285)
EXTRAORDINARY ITEMS:
Gain on extinguishment of debt,
no income tax effect -- 62,650
Loss from default of subscription
receivable -- (800,000)
----------- -----------
Total extraordinary items -- (737,350)
----------- -----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS 15,614 (1,446,635)
DISCONTINUED OPERATIONS:
Loss from discontinued operations
of integration segment -- (73,260)
=========== ===========
NET INCOME (LOSS) $ 15,614 $(1,519,895)
=========== ===========
EARNINGS PER SHARE :
Basic, before extraordinary items and
loss from discontinued operations $ (Note A) $ (0.03)
Extraordinary items n/a $ (0.04)
Loss from discontinued operations n/a (Note A)
----------- -----------
Net income (Loss) $ (Note A) $ (0.07)
=========== ===========
Diluted, before extraordinary items
and loss form discontinued operations $ (Note A) $ (0.03)
Extraordinary items n/a $ (0.04)
Loss from discontinued operations n/a (Note A)
----------- -----------
Net income (loss) $ (Note A) $ (0.07)
=========== ===========
Weighted Average Shares Outstanding:
Basic 25,705,509 22,045,674
Diluted 25,705,509 22,045,674
Note A: Less than $0.01 per share
ONESOURCE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
Stock
Common Stock Subscription Paid-in
Shares Amount Receivable Capital
----------- ---------- ----------- ----------
BALANCE,
DEC. 31, 2000 $17,525,566 $ 17,526 $ (806,250) $1,784,104
----------- ---------- ----------- ----------
Stock issued
for services 961,667 962 -- 61,213
Stock issued
to employees 500,000 500 -- 62,817
Stock issued
for note
conversions 936,667 937 -- 14,063
Receipt of
service for
stock sub-
scription -- -- 6,250 --
Stock sub-
scription
write-off -- -- 800,000 --
Shares returned
per rescission
agreement (1,016,666) (1,018) (121,841) --
Previously
unissued
shares, issued
in 2001 6,056,083 6,056 -- 884,648
Net loss (1,519,895) --
----------- ---------- ----------- ----------
BALANCE,
DEC. 31, 2001 $24,963,317 $ 24,963 $ -- $2,685,004
----------- ---------- ----------- ----------
Stock issued
for services 1,800,000 1,800 -- 18,700
Stock issued
for note
conversion 90,000 90 -- 90
Net income -- -- -- --
----------- ---------- ----------- ----------
BALANCE,
DEC. 31,2002 $26,853,317 $ 26,853 $ -- $2,703,794
=========== ========== =========== ==========
Accumulated
Deficit Total
----------- ----------
BALANCE, DEC. 31, 2000 $(1,756,909) $ (761,529)
----------- ----------
Stock issued for services -- 62,100
Stock issued to employees -- 63,317
Stock issued for note conversions -- 15,000
Receipt of service for stock subscription -- 6,250
Stock subscription write-off (800,000)
Shares returned per rescission agreement (122,859)
Previously unissued shares, issued in 2001 -- 890,704
Net loss
----------- ----------
BALANCE, DEC. 31, 2001 $(3,276,804) $ (566,837)
----------- ----------
Stock issued for services -- 20,500
Stock issued for note conversion -- 180
Net income 15,614 15,614
----------- ----------
BALANCE, DEC. 31,2002 $(3,261,190) $ (530,543)
=========== ==========
ONESOURCE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
FOR THE YEARS ENDED DECEMBER 31 2002 & 2001
---------------------------------------------------------------------
2002 2001
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 15,614 $(1,519,895)
Extraordinary gain -- (62,650)
Rescission of stock subscription
agreement -- (39,660)
Loss from discontinued operation -- 73,260
Loss on disposal of fixed assets 24,494 --
Depreciation and amortization 69,639 69,359
Amortization of deferred
financing costs -- 99,979
Stock issued for services 20,500 68,350
Stock issued as incentives to
employees -- 63,317
Stock subscription write-off -- 800,000
Changes in assets and
liabilities:
Accounts receivable (138,434) (55,973)
Inventory 1,373 1,286
Other current assets 13,548 (8,052)
Other assets (1,705) --
Accounts payable (147,397) (2,613)
Accrued expenses and
other liabilities 36,149 75,708
Deferred revenue 60,745 (4,465)
----------- -----------
Net cash used in continuing
operating activities (45,475) (442,049)
----------- -----------
Net cash used in discontinued
operating activities -- (48,812)
----------- -----------
Net cash used in operating
activities (45,475) (490,861)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and
equipment (5,269) (18,622)
Proceeds from disposal of
equipment 5,500 8,219
----------- -----------
Net cash provided by (used in)
investing activities 231 (10,403)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on bank lines of credit -- (100,913)
Cash proceeds from borrowings -- 479,290
Proceeds from notes payable 69,000 --
Principal payments on
notes payable (43,922) (13,161)
----------- -----------
Net cash provided by
financing activities 25,078 365,216
----------- -----------
NET DECREASE IN CASH (20,166) (136,048)
CASH, beginning of year 75,433 211,481
----------- -----------
CASH, end of year $ 55,267 $ 75,433
=========== ===========
ONESOURCE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------
2002 2001
---- ----
SUPPLEMENTAL CASH FLOW INFORMATION
Interest Paid $ 44,208 $ 58,952
======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Common stock issued for services $ 20,500 $131,667
======== ========
Common stock issued for note conversion $ 180 $ 15,000
======== ========
Debt extinguished in exchange for property $ 12,771 $ --
======== ========
Accounts payable conversion to debt $ 20,334 $ --
======== ========
Assumption of debt $ -- $ 7,007
======== ========
ONESOURCE TECHNOLOGIES, INC.
Management Comments
December 31, 2002
Introduction
The financial results discussed herein include the consolidated operations of
OneSource Technologies, Inc, (hereinafter "OneSource" and/or "the Company") for
the years ended December 31, 2002 and 2001. OneSource is engaged in two closely
related and complimentary lines of technology and business equipment support
activities; 1) equipment maintenance services, ("Maintenance") 2) value added
equipment supply sales, ("Supplies"). OneSource is in the technology equipment
maintenance and service industry and is the inventor of the OneSource Flat-Rate
Blanket Maintenance System(TM). This program provides customers with a Single
Source for all general office, computer and peripheral and industry specific
equipment technology maintenance, installation and supply products.
In April 2001 as part of management's refocused emphasis on its core business
opportunities the Company discontinued the operations of its wholly owned
subsidiary Net Express, Inc., (NEI). For comparative purposes the consolidated
financial statements of the Company for the year ended December 31, 2001 have
been presented to show the costs incurred in shutting down the segment
separately as discontinued operations in the following tables of financial data
as of December 31, 2001. Fiscal 2001 financial results have also been restated
to correct certain errors that were made a) in the amount of expense that was
attributed to Common Stock of the Company that was issued for legal and other
services, b) the application of cash received for Common Stock subscribed and c)
other accounting errors that came to light during the Company's conversion of
its accounting and information systems conversion in 2001. The effect of these
restatements was to increase the Net Loss for the year ended December 31, 2001
by $161,936 ($0.01 per share) and to increase Subscriptions Funded After
December 31, 1999 by $130,000. These adjustments were recorded in the
consolidated financial statements as of December 31, 2001.
Summary of Operations
Operating results have improved in the year ended December 31, 2002 compared to
the year ended December 31, 2001. The following table summarizes the comparative
operating results for the two periods:
Summary of Operations 2002 2001
----------- -----------
Revenues $ 2,958,871 $ 2,774,947
Cost of Revenue 1,928,071 1,854,820
Gross Margin 1,030,800 920,127
Selling, General and
Administrative Costs 838,876 1,476,273
Operating Income (Loss) before
Discontinued Operation 191,924 (556,146)
Other Income (Expense) (176,311) (153,139)
Subscription Receivable Write-off,
net of income tax -- (800,000)
Extraordinary Gain -- 62,650
Loss from discontinued operations -- (73,260)
----------- -----------
Net Income (Loss) $ 15,614 $(1,519,895)
----------- -----------
Fiscal 2002 results reflect management's changed focus and strategic emphasis
for the Company. Operations for the year ended December 31, 2002 show
significantly improved results with Net Income of $15,614 compared to a Net Loss
of $1,519,895 for the year ended December 31, 2001.
While consolidated revenues increased slightly by about six percent (6%) in 2002
compared to 2001, consolidated cost of revenues increased only four percent (4%)
resulting in a twelve percent (12%) increase in gross profit for the year ended
December 31, 2002 compared to the year ended December 31, 2001. Changes
implemented early in the second quarter of 2002 started to show improvement by
the end of the year as gross margins of the maintenance division had increased
significantly to 34% by the end of 2002 versus 23% during the first quarter of
2002. Management will continue to focus on this aspect of the service operations
in order to continue to bring down parts usage costs. To further control costs
of the maintenance operations the Company eliminated certain non-profitable
contracts during the year ended December 31, 2002.
The most significant factor contributing to the improved overall operating
results is the forty-three percent (43%) decrease in selling, general and
administrative costs for the year ended December 31, 2002 compared to 2001.
While the approximately $637,000 decrease is substantial, the Company continues
to incur high selling, general and administrative costs as a percent of revenues
and management continues to focus on implementing measures to bring these costs
more in line with the Company's business model.
In April 2001 the Company discontinued the operations of its integration
subsidiary because its activities were concentrated in the highly competitive
and low margin network hardware sales and integration industry, and drained
resources from the Company's core equipment maintenance and installation
divisions. The net effects of discontinued operations are shown separately in
the Consolidated Statement of Operations for the years ended December 31, 2002
and 2001.
Revenues
Consolidated revenues increased slightly in the year ended December 31, 2002
compared to the same period in 2001 as a result of increased revenues in the
maintenance divisions. Supply division revenues fell nine (9%) compared to 2001,
below forecasted results in 2002, although the maintenance division met
forecasted expectations. The following table details maintenance and supply
division revenues for 2002 & 2001:
Revenues 2002 2001
---------- ----------
Maintenance $2,137,754 $1,872,471
Supplies 821,117 902,476
---------- ----------
Total $2,958,871 $2,774,947
---------- ----------
The final phase of the Company's restructuring and realignment of its
maintenance division was implemented in the fourth quarter of 2001. The full
benefit of these changes, while not fully evident yet, are showing very positive
trends as of the end of 2002. As part of this restructuring, the General Manager
(GM) of the supply division assumed oversight responsibility for all maintenance
operations in the first quarter of 2002 in addition to his supply division
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