OSRC - ONESOURCE TECHS (OTCBB)
Date Open High Low Last Change Volume % Change
11/18/04 0.2600 0.4500 0.2500 0.3600 +0.1200 270990 +50.00%
Composite Indicator
Trend Spotter TM Buy
Short Term Indicators
7 Day Average Directional Indicator Buy
10 - 8 Day Moving Average Hilo Channel Buy
20 Day Moving Average vs Price Buy
20 - 50 Day MACD Oscillator Buy
20 Day Bollinger Bands Buy
Short Term Indicators Average: 100% - Buy
20-Day Average Volume - 104565
Medium Term Indicators
40 Day Commodity Channel Index Buy
50 Day Moving Average vs Price Buy
20 - 100 Day MACD Oscillator Buy
50 Day Parabolic Time/Price Buy
Medium Term Indicators Average: 100% - Buy
50-Day Average Volume - 78126
Long Term Indicators
60 Day Commodity Channel Index Buy
100 Day Moving Average vs Price Buy
50 - 100 Day MACD Oscillator Buy
Long Term Indicators Average: 100% - Buy
100-Day Average Volume - 94197
Overall Average: 100% - Buy
Price Support Pivot Point Resistance
0.2400 0.2333 0.2433 0.2533
15-Nov-2004
Entry Material Agreement, Change in Assets, Financial Obligation Matte
Item 1.01. Entry into a Material Definitive Agreement.
Revised Merger Agreement
On November 9, 2004, OneSource Technologies, Inc. entered into a Revised Merger Agreement with First Financial Computer Services, Inc., an Arkansas corporation ("FFCS"), Robert H. Thomason, Mary H. Thomason, Randy H. Thomason, and Jon M. Thomason. Robert H. Thomason is a director of our company. Mary Thomason is the spouse of Mr. Thomason, and Randy and Jon Thomason are sons of Mr. and Mrs. Thomason.
The Revised Merger Agreement made certain non-substantive changes to and superceded the Merger Agreement dated June 14, 2004, between the same parties. Pursuant to the Revised Merger Agreement, on November 9, 2004, FFCS was merged with and into our company, with our company surviving the merger and succeeding to and possessing all of the assets, liabilities, and business operations of FFCS.
Prior to the merger, FFCS was a single-source provider of equipment sales, leasing, and maintenance services to large national customers in the financial services industry. FFCS recorded revenue of approximately $11.8 million (unaudited) in calendar 2003. FFCS's services to its established national client base are complementary to the services already provided by our company. We plan to continue the business operations of FFCS acquired in the merger. As a result, the merger will significantly expand the geographic scope of our operations as well as the breadth of services that we can offer our clients. The combined companies will serve clients in 41 states. We will continue to maintain our headquarters in Scottsdale, Arizona.
Pursuant to the Revised Merger Agreement, we issued the following consideration to the Thomasons:
o Cash in the aggregate amount of $1,500,000;
o An aggregate of 9,500,000 shares of our common stock; and
o Unsecured promissory notes in the aggregate principal amount of $1,000,000. See Item 2.03, "Creation of Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant - Thomason Notes," for a more detailed description of these notes.
The Revised Merger Agreement includes provisions that (a) prohibit the Thomasons from engaging in competitive activities for a period of three years after November 9, 2004; (b) prohibit the Thomasons from disclosing confidential information to third parties; and (c) prohibit the Thomasons from soliciting past, present, or future customers or suppliers of our company or FFCS or any employee, independent contractor, or agent of our company or FFCS for a period of three years after November 9, 2004.
Pursuant to the Revised Merger Agreement, we entered into an independent contractor agreement or employment agreement with each of the Thomasons. See "Independent Contractor and Employment Agreements," below, for a description of these agreements. In addition, under the Revised Merger Agreement we granted the Thomasons unlimited "piggyback" registration rights if we register any new sales of our stock to the public, subject to customary underwriters' cutbacks. Under the Revised Merger Agreement, our company also agreed that, so long as any of the promissory notes issued to the Thomasons remains outstanding, we will not take certain corporate actions without the prior written consent of Robert H. Thomason.
The foregoing summary of the Revised Merger Agreement is qualified in its entirety by reference to the Revised Merger Agreement, which is attached as Exhibit 2.1 to this Form 8-K.
Pursuant to the Professional Services Agreement described below, we incurred a fee of $196,750 to Partners Resource Management, LLC, or "PRM," for management services provided to our company in connection with the merger. Michael L. Hirschey, our Chief Executive Officer and a director of our company, is the sole member of PRM. Mr. Hirschey, Leonard J. Ksobiech, who is our Chief Financial Officer, and other members of our management team are employees of PRM.
Credit Agreement
. . .
Item 2.01. Completion of Acquisition or Disposition of Assets.
On November 9, 2004, we acquired FFCS by merging FFCS with and into our company. See Item 1.01, "Entry into a Material Definitive Agreement - Merger Agreement," for a more detailed description of the parties to the merger, the nature of FFCS's business, and the nature and amount of consideration given in connection with the merger.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
Credit Agreement
Effective November 9, 2004, we entered into a Credit Agreement with Comerica Bank, as lender. The Credit Agreement provides for (a) a revolving line of credit facility for up to $1,500,000, which we can use to pay debt service and for working capital ("Facility A"), and (b) a term loan of $1,750,000, a portion of which we used to extinguish certain existing debt and the remainder of which we can use to pay debt service ("Facility B"). Amounts borrowed under the Credit Facility are secured by all of the tangible and intangible assets of our company. On November 9, 2004, we borrowed $500,000 under Facility A and $1,750,000 under Facility B. We paid origination fees totaling $25,000 in connection with the Credit Facility.
Advances under Facility A will be limited to the lesser of (a) $1,500,000 or (b) the sum of 80% of eligible domestic trade accounts receivable plus 25% of eligible domestic inventory (as those terms are defined in the Credit Agreement) less a collateral reserve of $850,000. Amounts borrowed under Facility A bear interest at the bank's prime rate plus 1.0%, payable monthly, and mature on November 9, 2006. Amounts borrowed under Facility B bear interest at the bank's prime lending rate plus 2.0%, payable monthly, and will be paid in equal monthly payments of principal and interest through maturity on November 9, 2008. In addition to these monthly payments, beginning March 31, 2005, we will be required to pay 50% of our excess cash flow (as defined in the Credit Agreement) for each calendar quarter to reduce the outstanding principal balance of Facility B. We may prepay amounts borrowed under the Credit Facility without premium or penalty.
The Credit Agreement includes various affirmative and negative covenants, including certain financial covenants and ratios, with which we must comply. Certain of these covenants prohibit our company from taking certain corporate actions without the written consent of the lender.
The foregoing summary of the Credit Agreement is qualified in its entirety by reference to the Credit Agreement and related documents, which are attached as Exhibits 10.45 through 10.48 to this Form 8-K.
Thomason Promissory Notes
As a portion of the consideration for the merger with FFCS, we issued unsecured five-year promissory notes to each of Robert H. Thomason, Mary H. Thomason, Randy H. Thomason, and Jon M. Thomason. The aggregate principal amount of these notes totals $1,000,000. The notes bear interest at the rate of 6.0% per annum. The notes require annual payments of principal in the aggregate amount of $200,000, plus accrued but unpaid interest, on November 9 of each year through November 9, 2009. The Thomason notes are subordinated and subject in right of payment to all "senior indebtedness" of our company, as defined in the notes. Subject to the Subordination and Intercreditor Agreements described below, we may prepay these notes at any time without premium or penalty.
The foregoing summary of the Thomason promissory notes is qualified in its entirety by reference to such notes, which are attached as Exhibits 10.49(a) through 10.49(d) to this Form 8-K.
Subordination and Intercreditor Agreements
Pursuant to the terms of the Credit Agreement, each of Robert H. Thomason, Mary H. Thomason, Randy H. Thomason, and Jon M. Thomason entered into a Subordination and Intercreditor Agreement with Comerica Bank. Our company consented to the terms of each of these agreements. Under these agreements, each of the Thomasons has agreed that payment of their respective promissory note is subordinated to our obligations under the Credit Agreement, provided that we can make the annual payments of principal and interest under the Thomason promissory notes so long as we are not in default under the Credit Agreement. The Subordination and Intercreditor Agreements also include standstill provisions and provisions regarding blockage on default, cross-default with the senior debt, and cross-acceleration with the senior debt.
Item 3.02. Unregistered Sales of Equity Securities.
Effective November 9, 2004, we issued an aggregate of 9,500,000 shares of common stock to Robert H. Thomason, Mary H. Thomason, Randy H. Thomason, and Jon M. Thomason in connection with the merger of FFCS with our company. See Item 1.01, "Entry into a Material Definitive Agreement." These shares were issued pursuant to the exemption set forth in Section 4(2) of the Securities Act of 1933. No form of general solicitation or general advertising was used in connection with the transaction and we obtained representations and warranties from each of the Thomasons that he or she had access to complete information concerning our company, was acquiring the shares of common stock for investment and not with a view to the distribution thereof, and otherwise was not an underwriter within the meaning of Section 2(11) of the Securities Act.
Item 5.02. Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers.
(c) Appointment of Randy H. Thomason as President
Effective November 9, 2004, Randy H. Thomason became our President pursuant to the terms of his employment agreement with our company. See Item 1.01, "Entry into a Material Definitive Agreement - Consulting and Employment Agreements," for a more detailed description of Mr. Thomason's employment agreement.
Mr. Thomason has served as one of the principals of FFCS since 1986, and was serving as a director and President of the Sales and Marketing Division of FFCS immediately prior to its merger with our company. Mr. Thomason developed and implemented FFCS's marketing and direct mail programs, which enabled FFCS to grow its business significantly over the last five years. Prior to joining FFCS, Mr. Thomason was employed in the investment banking industry. Mr. Thomason is the son of Robert H. Thomason and Mary H. Thomason and the brother of Jon M. Thomason.
Item 7.01. Regulation FD Disclosure.
On November 11, 2004, we issued a press release disclosing completion of the merger with FFCS. A copy of the press release is attached as Exhibit 99.1 hereto.
On November 11, 2004, we issued a press release announcing that we have retained Miller Capital Corporation as our financial advisor. A copy of the press release is attached as Exhibit 99.2 hereto.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
In accordance with Item 9.01(a)(4) of Form 8-K, the financial statements required by this Item 9.01 shall be filed by amendment to this Form 8-K no later than January 26, 2005.
(b) Pro Forma Financial Information.
In accordance with Item 9.01(b)(2) of Form 8-K, the pro forma financial information required by this Item 9(b) shall be filed by amendment to this Form 8-K no later than January 26, 2005.
(c) Exhibits
Exhibit
Number Description
------- -----------
2.1 Revised Merger Agreement dated November 9, 2004, by and among
OneSource Technologies, Inc., First Financial Computer Services, Inc.,
Robert H. Thomason, Mary H. Thomason, Randy H. Thomason, and Jon M.
Thomason
10.45 Credit Agreement dated November 9, 2004, between OneSource
Technologies, Inc. and Comerica Bank
10.46 Revolving Credit Promissory Note - Facility A dated November 9, 2004,
in the principal amount of $1,500,000, executed by OneSource
Technologies, Inc., as Borrower
10.47 Term Loan Note - Facility B dated November 9, 2004, in the principal
amount of $1,750,000, executed by OneSource Technologies, Inc., as
Borrower
10.48 Security Agreement and Collateral Assignment of Contracts dated
November 9, 2004, between OneSource Technologies, Inc. and Comerica
Bank
10.49(a) Promissory Note dated November 9, 2004, in the principal amount of
$255,000, executed by OneSource Technologies, Inc., as Borrower, in
favor of Robert H. Thomason
10.49(b) Promissory Note dated November 9, 2004, in the principal amount of
$255,000, executed by OneSource Technologies, Inc., as Borrower, in
favor of Mary H. Thomason
10.49(c) Promissory Note dated November 9, 2004, in the principal amount of
$245,000, executed by OneSource Technologies, Inc., as Borrower, in
favor of Randy H. Thomason
10.49(d) Promissory Note dated November 9, 2004, in the principal amount of
$245,000, executed by OneSource Technologies, Inc., as Borrower, in
favor of Jon M. Thomason
10.50 Independent Contractor Agreement dated November 9, 2004, between
OneSource Technologies, Inc. and Robert H. Thomason
10.51 Employment Agreement dated November 9, 2004, between OneSource
Technologies, Inc. and Randy H. Thomason
10.52 Professional Services Agreement dated October 1, 2004, between
OneSource Technologies, Inc. and Partners Resource Management, LLC
99.1 Press Release dated November 11, 2004 regarding closing of merger
99.2 Press Release dated November 11, 2004 regarding Miller Capital
Corporation
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'wid ma mind on ma money an' ma money on ma MIND!!!!!!!
Do Da Due!!!
RUFF!!!
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