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 CARLSBAD, Calif., Oct. 19 /PRNewswire/ -- Onsite Energy Corp. (AMEX: ONS) announced today its financial results for the fiscal year ended June 30, 1994. Revenues for the period were $2,381,122, compared with 1993 revenues of $805,376, an increase of $1,575,746 or 195 percent, due to the February 1994 reorganization and combination of Onsite Energy, the private company, with Western Energy Management ("Western"). Approximately $734,221, or 31 percent, of these revenues was from operations associated with EUA/Onsite L.P., a California limited partnership between Onsite and EUA Cogenex ("Cogenex"), in which Onsite sold its interest on Sept. 30, 1994, pursuant to a settlement with Cogenex.
 Cost of sales were $1,940,231 for the year end June 30, 1994, compared with $1,100,764 for the same period in 1993, an increase of $839,467. This increase was a result of the February 1994 reorganization and additional projects implemented by the company. SG&A was $2,009,107 for the period ended June 30, 1994, compared with $2,634,865 for the same period in 1993, a decrease of $625,758, which was primarily a result of staff reductions eliminating duplication of staff between the two companies (Onsite and Western) and other operating efficiencies. Cash flows from operations reflect an outflow of approximately $1,700,000 for 1994 versus approximately $2,800,000 for the same period in 1993, a decrease of $1,100,000.
 The net loss for year ended June 30, 1994, was $2,226,320, or $1.27 per share, compared with a loss of $2,983,648, or $2.95, for 1993. Legal and accounting expenses for the 1994 fiscal year were approximately $800,000, (40 percent of SG&A), $466,600 of which were related to the February 1994 reorganization and combination of Onsite Energy, the private company, with Western and the now-resolved litigation between Onsite and Cogenex regarding EUA/Onsite announced in a press release dated Oct. 4, 1994. These expenses are not expected to recur.
 In February 1994, Onsite Energy, the private company, reorganized and combined with Western, which resulted in Onsite. The fiscal year ended June 30, 1994, financials reflect a year of operations for Western and four and one-half months (Feb. 14, 1994, to June 30, 1994) of Onsite Energy, the private company, both predecessors of Onsite. Had the reorganization occurred on July 1, 1992, the unaudited proforma revenues would have been $6,311,087 with a net loss of $2,929,420, or $1.67 per share, for the 1994 fiscal year, compared with revenues of $4,946,739 and a net loss of $4,607,306, or $4.56 per share, for the same period in 1993.
 During the course of the audit of Onsite's consolidated financial statements, Onsite discovered a technical default in a loan agreement between Television City Cogen L.P. ("TCC"), a California limited partnership wholly owned by Onsite and Shawmut Bank, N.A., ("Shawmut"). The technical default arises from TCC's guarantee (the "Guaranty") executed on Jan. 16, 1993 of Onsite debt owed to Cogenex, and a related Security Assignment Agreement (the "Security Agreement") encumbering TCC assets, but subordinate to Shawmut's secured lien on the same assets. According to the loan agreement between TCC and Shawmut, TCC was required to obtain prior written consent before executing the Guaranty

and Security Agreement. TCC's failure to obtain Shawmut's prior written consent to the Guaranty and Security Agreement was an oversight in the documentation of loans made by Cogenex to Onsite which was discovered during the audit and the concurrent settlement negotiations with Cogenex restructuring the debt.
 TCC and Onsite are in the process of obtaining Shawmut's consent to the execution of the Guaranty and Security Agreement. However, because the technical default was not discovered until a few days before Onsite's Form 10-KSB was due to be filed with the Securities and Exchange Commission, TCC and Onsite were unable to obtain Shawmut's consent before filing. As a result, the loan to Shawmut in the amount of $1,151,500 had to be reclassified from long-term debt to a current liability on Onsite's consolidated financial statements. As a result, Onsite's working capital was decreased further to a negative $2,755,933 as of June 30, 1994, compared to $607,208 as of June 30, 1993. Onsite's independent accountants have made mention of this uncertainty in their opinion accompanying Onsite's year end financial statements, and have rendered a going concern opinion specifically related to the technical default. Management is attempting to reach a mutually satisfactory resolution of this issue with the establishment of a formal subordination agreement mutually acceptable to TCC, Cogenex and Shawmut. Once Shawmut's consent has been obtained, the loan will be reclassified as long-term debt eliminating the uncertainty expressed in the independent accountants' opinion. However, no assurances can be given that Shawmut's consent will be obtained.
 Onsite filed its 10-KSB on Oct. 14, 1994, and expects to file an amended 10-KSB by the end of October that will contain a number of clarifications not deemed material by the company. The AMEX has advised that it intends to resume trading Onsite Stock following the release of this news.
 Since February 1994, Onsite has not met the AMEX' original and continued listing financial criteria. Onsite does not meet, nor does it expect to meet in the immediate future, the AMEX' financial criteria for continued listing. Consequently, Onsite expects to have a conference with the AMEX staff in late November to discuss Onsite's plan to meet the criteria. No assurances can be given that the AMEX will continue the listing of Onsite's shares after the conference scheduled for late November.
 Although Onsite experienced an operating loss for its first fiscal quarter ended Sept. 30, 1994, as a result of the recent settlement of the lawsuits with Cogenex regarding EUA/Onsite, Onsite will recognize $518,000 in deferred revenues, resulting in a net profit for the quarter. At this time, there are no offset costs anticipated to be associated with this deferred revenue. The settlement also provides Onsite with the option to purchase eight of EUA/Onsite's core energy efficiency contracts at EUA/Onsite's approximate book value for the projects, subject to required consents and releases. In addition, Cogenex made an $800,000 cash payment to Onsite which will be recognized as income in the quarter ending Dec. 31, 1994, upon completion of the purchase of the projects referred to above. Onsite anticipates releasing its quarterly financials, for the period ended Sept. 30, 1994, prior to the end of October.
 Onsite Energy Corp. is a comprehensive energy efficiency services company which develops, designs, constructs, owns and operates efficient, environmentally sound energy projects, including lighting retrofit systems, energy management systems, equipment upgrades, HVAC modifications, high efficiency motors and cogeneration systems. It is Onsite's mission to be the premier provider of energy efficiency solutions for institutional, commercial and industrial customers in the Western United States.
 Audited Fiscal Year Ended June 30,
 1994 1993
 Revenues $2,381,122 $805,376
 Cost of sales 1,940,231 1,100,764
 SG&A 2,009,107 2,634,865
 Operating loss (1,568,216) (2,930,253)
 Other income (expense):
 Loss on sale of assets --- (24,089)
 Interest expense, net (340,635) (28,506)
 Equity losses in investee (337,500) ---
 Loss from operations before provision
 (benefit) for income taxes (2,246,351) (2,982,848)
 Provision (benefit) for income taxes (20,031) 800
 Net loss ($2,226,320) ($2,983,648)
 Net loss per Class a common and
 equivalent shares ($1.27) ($2.95)
 Weighted average number of
 common shares outstanding 1,757,085 1,010,456
 Condensed Balance Sheet
 For the Years Ended June 30, 1994 and 1993
 1994 1993
 Current assets $923,801 $1,265,591
 Property and equipment, net 2,287,212 215,101
 Goodwill, net of amortization
 of $150,053 1,926,096 0
 Other assets 155,710 5,701
 Total assets $5,292,819 $1,486,393
 Current liabilities $3,579,734 $658,387
 Long term liabilities 1,158,346 327,487
 Shareholders' equity 554,739 500,519
 Total liabilities and
 shareholders' equity $5,292,819 $1,486,393
 -0- 10/17/94
 /CONTACT: Fran Saveriano of Onsite Energy, 619-931-2400; or Shannon T. Squyres of Corporate Relations Group, 714-955-1860/

CO: Onsite Energy Corp.; Western Energy Management ST: California IN: UTI SU: ERN

JB-MO -- LA010 -- 1002 10/19/94 09:34 EDT
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Date:Oct 19, 1994

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