Delaware
|
11-3255619
|
|
(State
or jurisdiction of incorporation
or
organization)
|
(I.R.S.
Employer Identification)
|
|
·
|
Accountabilities,
Inc., was originally incorporated as a Delaware corporation named
Thermaltec International Corp. in November 1994 and its primary business
from inception through July 2001 was the establishment and support
of
thermal spray coating shops in Latin
America.
|
|
·
|
In
June 2000, Thermaltec acquired Tranventures Industries, Inc., a New
York
corporation formed to exploit various business opportunities in the
transportation and logistics industries in exchange for shares of
Thermaltec common stock.
|
|
·
|
In
May 2001, Thermaltec changed its name to TTI Holdings of America
Corp.
|
|
·
|
In
July 2001, TTI Holdings of America divested the thermal spray coating
business by way of a spin-off of a wholly owned subsidiary to its
shareholders.
|
|
·
|
In
August 2002, TTI Holdings of America acquired Steam Cleaning USA,
Inc., a
corporation formed to acquire and expand a steam cleaning business
in a
reverse acquisition transaction pursuant to which Steam Cleaning
USA, Inc.
was merged into TTI Holdings of America, and TTI Holdings of America
changed its name to Steam Cleaning USA,
Inc.
|
|
·
|
On
July 1, 2003, Steam Cleaning USA, Inc. acquired all of the outstanding
capital stock of Humana Trans Services Holding Corp., a Delaware
corporation which, through its subsidiaries, provided employee leasing
and
benefits processing services and temporary staffing placement solutions
to
the trucking industry.
|
|
·
|
In
August 2003, Steam Cleaning USA, Inc. changed its name to Humana
Trans
Services Holding Corp.
|
|
·
|
In
December 2004, Humana sold its employee leasing and benefits processing
business to a third party.
|
|
·
|
In
June 2005, Humana acquired a business plan concept from Allan Hartley
related to the staffing and recruitment of professional employees
and, at
the same time formed a new subsidiary named Accountabilities Inc.
to
develop the new business plan and named Mr. Hartley as president
of the
subsidiary.
|
|
·
|
In
July 2005, Humana sold the segment of its staffing business devoted
to the
trucking industry to an entity controlled by its management team
(excluding Mr. Hartley).
|
|
·
|
In
October 2005, Accountabilities Inc., the subsidiary of Humana, was
merged
into Humana and the surviving corporation changed its name to
Accountabilities, Inc.
|
|
·
|
In
November 2005, Accountabilities acquired the operations of three
offices
from Stratus Services Group, Inc., a staffing company, in exchange
for its
agreement to pay to Stratus a percentage of revenues of the acquired
business for a period of 36 months.
|
|
·
|
In
March 2006, Accountabilities acquired the operations of five offices
from
US Temp Services, Inc., a staffing company, for a purchase price
of
$1,723,000.
|
|
·
|
In
February 2007, Accountabilities acquired substantially all of the
business
and assets of ReStaff Services, Inc., a staffing company, for a total
purchase price of $4,710,000.
|
·
|
CPA
Partner on Premise Program
|
|
·
|
the
use of a recognized and trusted CPA brand, which we believe is a
significant market differentiator versus
competitors;
|
|
·
|
accelerated
market presence through the immediate access to the CPA firm clients;
and
|
|
·
|
a
significant reduction in start-up costs associated with developing
new
offices and markets.
|
·
|
Direct
Professional Services
|
·
|
Staffing
Abilities
|
|
·
|
National
Recruiting Center – Through our national recruiting center, we receive and
complete job orders for candidates for any market in the
U.S. Through this center, we also obtain overflow orders from
our CPA firm affiliates and orders outside of their designated area,
splitting the fees 50/50, thereby further capitalizing on our CPA
relationships, but at higher margins than those derived through our
Partner on Premise agreements.
|
|
·
|
Job
Board – Through our job board, AccountingEmployees.com, we are able to
capitalize on what we believe is one of the fastest growing segments
of
the staffing industry. CPA members post jobs for free while all
other postings are fee based.
|
·
|
consulting
firms;
|
·
|
local,
regional and national accounting
firms;
|
·
|
independent
contractors;
|
·
|
traditional
and Internet-based staffing firms and their specialized divisions;
and
|
·
|
the
in-house resources of our clients.
|
·
|
We
may not be able to compete successfully for available acquisition
candidates, complete future acquisitions or investments or accurately
estimate their financial effect on our
business;
|
·
|
Future
acquisitions, investments or joint ventures may require us to issue
additional common stock, spend significant cash amounts or decrease
our
operating income;
|
·
|
We
may have trouble integrating the acquired business and retaining
its
personnel;
|
·
|
Acquisitions,
investments or joint ventures may disrupt business and distract management
from other responsibilities; and
|
·
|
If
our acquisitions or investments fail, our business could be
harmed.
|
·
|
claims
of discrimination and harassment,
|
·
|
violations
of wage and hour laws,
|
·
|
criminal
activity,
|
·
|
claims
relating to actions by customers including property damage and personal
injury, misuse of proprietary information and misappropriation of
assets,
and
|
·
|
immigration
related claims.
|
For
the Period
|
||||||||||||
From
June 9, 2005
|
||||||||||||
Year
Ended
|
(Date
of Inception) to
|
|||||||||||
September
30, 2007
|
September
30, 2006
|
September
30, 2005
|
||||||||||
Revenues
|
$ |
57,581,000
|
$ |
34,088,000
|
$ |
-
|
||||||
Income
(loss) from operations
|
$ |
721,000
|
$ |
126,000
|
$ | (91,000 | ) | |||||
Net
loss
|
$ | (174,000 | ) | $ | (372,000 | ) | $ | (91,000 | ) | |||
Basic
and diluted net loss per share
|
$ | (0.01 | ) | $ | (0.04 | ) | $ | (0.03 | ) | |||
Shares
used in basic and diluted per share calculations
|
15,515,000
|
8,792,000
|
2,960,000
|
As
of
|
||||||||
September
30, 2007
|
September
30, 2006
|
|||||||
Total
assets
|
$ |
8,819,000
|
$ |
4,073,000
|
||||
Long-term
debt including current portion
|
$ |
5,228,000
|
$ |
1,614,000
|
||||
Total
stockholders’ equity (deficit)
|
$ |
450,000
|
$ | (460,000 | ) |
▪
|
CPA
Partner on Premise Program
|
▪
|
Staffing
Abilities
|
|
▪
|
National
Recruiting Center – Through our national recruiting center, we receive and
complete job orders for candidates for any market in the
U.S. Through this center, we also obtain overflow orders
from our CPA firm affiliates and orders outside of their designated
area,
splitting the fees 50/50, thereby further capitalizing on our CPA
relationships, but at higher margins than those derived through our
Partner on Premise agreements.
|
|
▪
|
Job
Board – Through our job board AccountingEmployees.com, we are able to
capitalize on one of the fastest growing segments of the staffing
industry. CPA members post jobs for free while all other
postings are fee based.
|
|
▪
|
Management
believes that the CPA Partner on Premise sales and marketing agreements
represents a significant marketing differentiator to our current
and
potential clients in that the services are associated with the trusted
name of known regional public accounting firms, and represents an
important part of our strategy of growing our Direct Professional
Services
offering. In recognition of this, we are continuing to invest
in efforts to support the identification and procurement of additional
CPA
firm affiliates nationwide, as well as investing in the continued
improvement and refinement of our operations and general and
administrative activities to support our current relationships going
forward.
|
|
▪
|
A
significant component of our growth to date has come through
acquisitions. Management continues to invest resources in
activities to seek, complete and integrate acquisitions that enhance
current service offerings and effectively assimilate into our CPA
Partner
on Premise marketing and sales strategy. Additionally,
management seeks acquisitions in desired geographical markets and
which
have minimal costs and risks associated with
integration. Management believes that effectively acquiring
businesses with these attributes will be critical to carrying out
our
strategy of capitalizing on the CPA Partner on Premise Program and
other
sales and marketing initiatives.
|
|
▪
|
Our
success depends on our ability to provide our clients with highly
qualified and experienced personnel who possess the skills and experience
necessary to satisfy their needs. Such individuals are in great
demand, particularly in certain geographic areas, and are likely
to remain
a limited resource for the foreseeable future. Management is
responding to this demand through proactive recruiting efforts, targeted
marketing, the use of our job board, AccountingEmployees.com, and
the
continued expansion of the CPA Partner on Premise Program which management
believes is also an attractive differentiator to prospective
candidates.
|
|
▪
|
We
have financed our growth largely through the issuance of debt and
have
incurred negative working capital. As of September 30, 2007 we
had negative working capital of ($3,226,000), for which the component
constituting the current portion of long term debt was
$2,338,000. Total outstanding debt as of September 30, 2007 was
$5,228,000, $576,000 of which is past due or due upon demand, whereas
$3,146,000 of which is subject to proportionate reduction in the
event the
associated acquired businesses for which the debt was issued do not
produce agreed upon levels of profitability. The ability to
service our debt and to generate sufficient amounts of working capital
is
critical to the successful operation of our
business. Management is engaging in the following activities to
effectively accomplish these objectives: a) the continued
expansion of higher margin professional services, b) participating
in
discussions with creditors to restructure amounts currently due as
well as
to restructure amounts not yet due with more easily serviceable payment
terms, including the possibility of conversion of certain portions
to
equity, c) aggressively managing cash and expenses, and d)
seeking additional sources of financing with acceptable terms, including
the sale of additional debt or equity related
instruments.
|
|
▪
|
After
becoming a fully reporting public company, we will experience increases
in
certain general and administrative expenses to comply with the laws
and
regulations applicable to public companies. These laws and regulations
include the provisions of the Sarbanes-Oxley Act of 2002 and the
rules of
the Securities and Exchange Commission and the Nasdaq Stock
Market. To comply with the corporate governance and operating
requirements of being a public company, we will incur increases in
such
items as personnel costs, professional services fees, and fees for
independent directors. In the first and second quarters of
2007, general and administrative expenses increased substantially
as we
added resources and incurred outside audit, valuation and legal fees
in
preparation of becoming a public
company.
|
▪
|
Stratus
Services Group, Inc. Offices Acquisition (“Stratus
Acquisition”). In November 2005, we
acquired the operations of three general staffing offices from Stratus
Services Group, Inc. in exchange for certain future earn-out
payments.
|
▪
|
US
Temp Services, Inc. Offices Acquisition (“US Temp
Acquisition”). On March 31, 2006, we
acquired the operations, including five general staffing offices,
of US
Temp Services, Inc. in exchange for cash, notes and shares of our
common
stock.
|
▪
|
ReStaff
Services, Inc. Offices Acquisition (“ReStaff
Acquisition”). On February 26, 2007, we
acquired the operations, including three general staffing offices,
of
ReStaff Services, Inc. in exchange for, cash, notes and shares of
our
common stock.
|
September
30,
|
September
30,
|
|||||||
2007
|
2006
|
|||||||
Long-term
debt
|
||||||||
8%
subordinated note (i)
|
$ |
93,000
|
$ |
119,000
|
||||
3%
convertible subordinated note (ii)
|
527,000
|
631,000
|
||||||
Unsecured
note (iii)
|
80,000
|
80,000
|
||||||
Long
term capitalized consulting obligations (v)
|
159,000
|
266,000
|
||||||
10%
convertible subordinated note (xiii)
|
232,000
|
-
|
||||||
Other
debt
|
50,000
|
-
|
||||||
Total
|
1,141,000
|
1,096,000
|
||||||
Less
current maturities
|
691,000
|
431,000
|
||||||
Non-current
portion
|
450,000
|
665,000
|
||||||
Related
party long-term debt
|
||||||||
8%
unsecured demand note (iv)
|
101,000
|
135,000
|
||||||
Long
term capitalized consulting obligations (vi)
|
46,000
|
73,000
|
||||||
12%
unsecured convertible note (vii)
|
270,000
|
280,000
|
||||||
Demand
loan (viii)
|
30,000
|
30,000
|
||||||
6%
unsecured note (ix)
|
300,000
|
-
|
||||||
6%
unsecured note (x)
|
2,846,000
|
-
|
||||||
9%
unsecured note (xi)
|
210,000
|
-
|
||||||
Unsecured
loan (xii)
|
284,000
|
-
|
||||||
Total
|
4,087,000
|
518,000
|
||||||
Less
current maturities
|
1,647,000
|
473,000
|
||||||
Non-current
portion
|
2,440,000
|
45,000
|
||||||
Total
long-term debt
|
5,228,000
|
1,614,000
|
||||||
Less
current maturities
|
2,338,000
|
904,000
|
||||||
Total
non-current portion
|
$ |
2,890,000
|
$ |
710,000
|
||||
Less
than
|
More
than
|
|||||||||||||||||||
Contractual
Obligations and Commitments
|
Total
|
1
year
|
1-3
years
|
3-5
years
|
5
years
|
|||||||||||||||
Long-term
debt, including interest
|
$ |
5,759,000
|
$ |
2,640,000
|
$ |
3,047,000
|
$ |
72,000
|
$ |
-
|
||||||||||
Operating
leases
|
2,183,000
|
443,000
|
891,000
|
635,000
|
214,000
|
|||||||||||||||
Total
contractual obligations and commitments
|
$ |
7,942,000
|
$ |
3,083,000
|
$ |
3,938,000
|
$ |
707,000
|
$ |
214,000
|
||||||||||
Amount
and
|
Percentage
|
|||||||
Nature
of
|
Of
|
|||||||
Beneficial
|
Outstanding
|
|||||||
Name
|
Ownership
|
Shares
|
||||||
Ronald
Shapss
|
1,278,000
|
7.6 | % | |||||
Allan
Hartley
|
890,000
|
5.3
|
||||||
Norman
Goldstein
|
538,484 | (2) |
3.1
|
|||||
James
Zimbler
|
910,369
|
5.4
|
||||||
Jay
Schecter
|
-
|
-
|
||||||
John
Messina
|
100,000
|
(3 | ) | |||||
Elliot
Cole
|
50,000
|
(3 | ) | |||||
Mark
Levine
|
500,000
|
3.0
|
||||||
Michael
Newstead
|
-
|
-
|
||||||
Stephen
DelVecchia
|
60,000
|
(3 | ) | |||||
Tri-State
Employment Services, Inc. (1)
|
5,261,700
|
31.4
|
||||||
Pylon
Management, Inc.
|
2,668,334 | (4) |
15.9
|
|||||
All
Executive Officers and Directors as a Group (10 persons)
|
4,326,853
|
25.0 | % |
(1)
|
The
address of this shareholder is 160 Broadway, 15th
Floor, New
York, New York 10038. Robert Cassera, President of Tri-State
Employment Services, Inc. exercises investment and dispositive power
of
the shares owned by Tri-State Employment Services,
Inc.
|
(4)
|
Includes
150,000 shares owned by Washington Capital, LLC. Pylon Management,
Inc. and Washington Capital, LLC are owned by Kathy Raymond who exercises
sole investment and dispositive power of the shares owned by Pylon
Management.
|
Name
|
Age
|
Title
|
|
|
|
Ronald
Shapss
|
61
|
Chairman
of the Board
|
Allan
Hartley
|
56
|
President
and Director
|
Mark
S. Levine
|
46
|
Chief
Operating Officer
|
Stephen
DelVecchia
|
38
|
Chief
Financial Officer
|
Michael
Newstead
|
57
|
Vice
President of Operations
|
James
Zimbler
|
42
|
Vice
President, Treasurer
|
Elliott
Cole
|
75
|
Director
|
Norman
Goldstein
|
66
|
Director
|
Jay
H. Schecter
|
54
|
Director
|
John
Messina
|
40
|
Director
|
|
·
|
base
salary;
|
|
·
|
performance-based
incentive cash compensation;
|
|
·
|
stock
awards; and
|
|
·
|
retirement
and other benefits.
|
|
·
|
market
data, which generally consisted of publicly available filings of
other
professional staffing and workforce solutions companies, including
Westaff, Resources Connection and Kforce,
Inc.;
|
|
·
|
internal
review of the executives’ compensation, both individually and relative to
other officers; and
|
|
·
|
individual
performance of the executive.
|
|
·
|
enhancing
the link between the creation of stockholder value and long-term
executive
incentive compensation;
|
|
·
|
providing
an opportunity for increased equity ownership by executives;
and
|
|
·
|
maintaining
competitive levels of total
compensation.
|
Name
and Principal Position
|
Fiscal
Year Ended
|
Salary
($)
|
Bonus
($)
|
Stock
Awards ($)
|
Option
Awards ($)
|
Non-Equity
Incentive Plan Compensation ($)
|
Nonqualified
Deferred Compensation Earnings ($)
|
All
Other Compensation ($)
|
Total
($)
|
||||||||||||||||||||||||
Allan
Hartley,
|
09/30/07
|
$ |
162,659
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
12,000
|
$ |
174,659
|
||||||||||||||||
President
|
09/30/06
|
88,461
|
-
|
176,000 | (1) |
-
|
-
|
-
|
2,000
|
266,461
|
|||||||||||||||||||||||
And
CEO
|
09/30/05
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Lisa
Connallon,
|
09/30/07
|
$ |
100,776
|
$ |
485
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
12,000
|
$ |
113,261
|
||||||||||||||||
Vice
President -
|
09/30/06
|
67,184
|
-
|
-
|
-
|
-
|
-
|
7,000
|
74,184
|
||||||||||||||||||||||||
Finance
|
09/30/05
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Stephen
DelVecchia
|
09/30/07
|
$ |
85,096
|
$ |
-
|
$ | 2,597 | (1) | $ |
-
|
$ |
-
|
$ |
-
|
$ |
3,500
|
$ |
91,193
|
|||||||||||||||
Chief
Financial
|
09/30/06
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Officer
|
09/30/05
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Mark
S. Levine
|
09/30/07
|
$ |
145,962
|
$ |
-
|
$ | 14,840 | (1) | $ |
-
|
$ |
-
|
$ |
-
|
$ |
6,400
|
$ |
167,202
|
|||||||||||||||
Chief
Operating
|
09/30/06
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Officer
|
09/30/05
|
_-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Name
|
Grant
Date
|
All
Other Stock Awards. Number of Shares of Stock or
Units
|
Grant
Date Fair Value of Stock Awards
|
||||||
Stephen
DelVecchia
Chief
Financial Officer
|
March
5, 2007
|
60,000 | (1) | $ |
13,400
|
||||
Mark
Levine
Chief
Operating Officer
|
January
30, 2007
|
500,000 | (2) | $ |
111,300
|
(1)
|
Represents
a grant of restricted stock under employment agreement that vests
in three
equal annual installments commencing upon the first anniversary of
the
date of grant.
|
(2)
|
Represents
a grant of restricted stock under employment agreement that vests
in five
equal annual installments commencing upon the first anniversary of
the
date of grant.
|
Option
Awards
|
Stock
Awards
|
||||||||||||||||||||||||||||||||||||
Name
|
Date
of Grant
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
(#)
|
Option
Exercise Price
($)
|
Option
Expiration Date
|
Number
of Shares or Units of Stock That Have Not Vested
(#)
|
Market
Value of Shares or Units of Stock That Have Not
Vested
($)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other
Rights
That Have Not Vested
(#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares,
Units or
Other Rights That Have Not Vested
($)
|
|||||||||||||||||||||||||||
Stephen
DelVecchia, Chief Financial Officer
|
03/5/07
|
-
|
-
|
-
|
-
|
-
|
60,000 | (1) | $ |
30,000
|
-
|
-
|
|||||||||||||||||||||||||
Mark
Levine, Chief Operating Officer
|
01/30/07
|
-
|
-
|
-
|
-
|
-
|
500,000 | (2) | $ |
250,000
|
-
|
-
|
(1)
|
Represents
an award of restricted stock that vests in equal annual installments
on
March 5, 2008, 2009 and 2010.
|
(2)
|
Represents
an award of restricted stock that vests in equal annual installments
on
January 30, 2008, 2009, 2010, 2011 and
2012.
|
Low
|
High
|
|||||||
Fiscal
Year Ended September 30, 2006
|
||||||||
First
Quarter
|
$ |
.20
|
$ |
.95
|
||||
Second
Quarter
|
.05
|
.50
|
||||||
Third
Quarter
|
.35
|
.65
|
||||||
Fourth
Quarter
|
.11
|
.54
|
||||||
Fiscal
Year Ended September 30, 2007
|
||||||||
First
Quarter
|
.20
|
.45
|
||||||
Second
Quarter
|
.30
|
.78
|
||||||
Third
Quarter
|
.41
|
.70
|
||||||
Fourth
Quarter
|
.32
|
.70
|
||||||
Fiscal
Year Ending September 30, 2008
|
||||||||
First
Quarter
|
.31
|
.35
|
||||||
Second
Quarter (through January 11, 2008)
|
.35
|
.50
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and
rights
|
Number
of securities
Remaining
available for future issuance under equity compensation plans (excluding
securities reflected in column (a))
|
||||||||||
Plan
Category
|
(a)
|
(b)
|
(c)
|
|||||||||
Equity
compensation plans approved by security holders
|
-
|
$ |
-
|
-
|
||||||||
Equity
compensation plans not approved by security holders (1)
|
-
|
$ |
-
|
2,000,000
|
||||||||
Total
|
-
|
$ |
-
|
2,000,000
|
||||||||
(1)
|
Represents
shares reserved for issuance under our Equity Incentive Plan which
was
approved by shareholders subsequent to September 30,
2007.
|
Number
|
Description
|
|
2.1
|
Asset
Purchase Agreement between Accountabilities, Inc. and Stratus Services
Group, Inc. (1)
|
|
2.2
|
Asset
Purchase Agreement between Accountabilities, Inc. and US Temp Services,
Inc.
|
|
2.3
|
Asset
Purchase Agreement between Accountabilities, Inc. and Restaff Services,
Inc.
|
|
3.1
|
Amended
and Restated Certificate of Incorporation of the
Registrant.
|
|
3.2
|
By-Laws
of the Registrant. (2)
|
|
10.1
|
Convertible
Note issued by Accountabilities, Inc. to North Atlantic Resources
LTD in
principal amount of $250,000 (1).
|
|
10.2
|
Form
of Warrant issued with respect to 55,986 shares of Accountabilities,
Inc.
Common Stock. (1)
|
|
10.3
|
Employment
Agreement between Accountabilities, Inc. and Allan Hartley.
(1)
|
|
10.4
|
Employment
Agreement between Accountabilities, Inc. and Mark Levine.
(1)
|
|
10.5
|
Employment
Agreement between Accountabilities, Inc. and Stephen DelVecchia.
(1)
|
|
10.6
|
Convertible
Subordinated Note dated March 31, 2006 issued by Accountabilities,
Inc. to
Bernard Freedman and Alice Freedman Living Trust in principal amount
of
$675,000. (1)
|
|
10.7
|
Demand
Note dated March 31, 2006 issued by Accountabilities, Inc. to Washington
Capital in the principal amount of $150,000. (1)
|
|
10.8
|
Subordinated
Note dated March 31, 2006 issued by Accountabilities, Inc. to Bernard
Freedman and Alice Freedman Living Trust in principal amount of $175,000.
(1)
|
|
10.9
|
Consulting
Agreement dated March 31, 2006 between Accountabilities, Inc. and
William
Thomas. (1)
|
|
10.10
|
Consulting
Agreement dated March 31, 2006 between Accountabilities, Inc. and
Jerry
Schumacher. (1)
|
|
10.11
|
Consulting
Agreement dated March 31, 2006 between Accountabilities, Inc. and
Washington Capital, LLC. (1)
|
|
10.12
|
Convertible
Note dated April 1, 2006 to Norman Goldstein in principal amount
of
$260,000. (1)
|
|
10.13
|
Promissory
Note dated February 26, 2007 issued by Accountabilities, Inc. to
ReStaff
Services, Inc. in principal amount of $300,000. (1)
|
|
10.14
|
Promissory
Note dated February 26, 2007 issued by Accountabilities, Inc. to
ReStaff
Services, Inc. in principal amount of $2,900,000. (1)
|
|
10.15
|
Consulting
Agreement between Accountabilities, Inc. and Washington Capital,
LLC
(1)
|
|
10.16
|
Agreement
with Tri-State to finance ReStaff acquisition (1)
|
|
10.17
|
Agreement
dated August 1, 2006 between Accountabilities, inc. and Tri-State
Employment Services , Inc. (1)
|
|
10.18
|
Receivable
Sale Agreement dated as of March 1, 2007 between Accountabilities,
Inc.
and Wells Fargo. (1)
|
|
21
|
Subsidiaries
(1)
|
|
Footnote
1
|
Incorporated
by reference to similarly numbered Exhibits filed with Amendment
No. 2 to
the Registration Statement on Form S-4 of Hyperion Energy Inc. as
filed
with the Securities and Exchange Commission on November 27,
2007.
|
|
Footnote
2
|
Incorporated
by reference to Exhibit 3.4 to the Form 10SB of Registrant filed
with the
Securities and Exchange Commission on November 21, 2000
|
|
AccountAbilities, Inc. | |||
Date:
January 22, 2008
|
By:
|
/s/ Stephen DelVecchia | |
Name: Stephen DelVecchia | |||
Title: Chief Financial Officer | |||
Date:
January 22, 2008
|
By:
|
/s/ James W. Zimbler | |
Name: James W. Zimbler | |||
Title: Vice President | |||
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
Balance
Sheets as of September 30, 2006 and 2007
|
F-3
|
Statements
of Operations for the Period from June 9, 2005 through September
30, 2005
and the Years Ended September 30, 2006 and 2007
|
F-4
|
Statements
of Cash Flows for the Period from June 9, 2005 through September
30, 2005
and the Years Ended September 30, 2006 and 2007
|
F-5
|
Statement
of Stockholders Equity for the Period from June 9, 2005 through September
30, 2007
|
F-6
|
Notes
to Financial Statements
|
F-7
|
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
F-23
|
Statements
of Net Assets Sold as of September 30, 2005 and 2004
|
F-24
|
Statement
of Net Revenues, Cost of Revenues and Expenses for the years Ended
September 30, 2005 and 2004
|
F-25
|
Notes
to Financial Statements
|
F-26
|
Statement
of Net Revenues, Cost of Revenues and Expenses for the Two Months
Ended
November 28, 2005 and the Three Months Ended December 31,
2004
|
F-29
|
Notes
to Financial Statements
|
F-30
|
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
F-32
|
Balance
Sheets as of December 31, 2006 and 2005
|
F-33
|
Statements
of Income for the Year Ended December 31, 2006 and the Period from
April
12, 2005 through December 31, 2005
|
F-34
|
Statements
of Cash Flow for the Year Ended December 31, 2006 and the Period
from
April 12, 2005 through December 31, 2005
|
F-35
|
Statement
of Stockholders’ Equity for the Period from April 12, 2005 through
December 31, 2006
|
F-36
|
Notes
to Financial Statements
|
F-37
|
Statements
of Income for the Two Months Ended February 26, 2007 and the Three
Months
Ended March 31, 2006
|
F-41
|
Statements
of Cash Flows for the Two Months Ended February 26, 2007 and the
Three
Months Ended March 31, 2006
|
F-42
|
Statement
of Stockholders’ Equity for the Period from December 31, 2006 through
February 26, 2007
|
F-43
|
Notes
to Financial Statements
|
F-44
|
Unaudited
Pro Forma Condensed Financial Information
|
F-45
|
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
F-48
|
Balance
Sheets as of December 31, 2005 and 2004
|
F-49
|
Statements
of Operations for the Years Ended December 31, 2005 and
2004
|
F-50
|
Statements
of Cash Flow for the Years Ended December 31, 2005 and
2004
|
F-51
|
Statements
of Stockholders’ Deficit for the Period from December 31, 2003 through
December 31, 2005
|
F-52
|
Notes
to Financial Statements
|
F-53
|
Statements
of Operations for the Three Months Ended March 31, 2006 and
2005
|
F-58
|
Statements
of Cash Flows for the Three Months Ended March 31, 2006 and
2005
|
F-59
|
Statement
of Stockholders’ Deficit for the Period from December 31, 2005 through
March 31, 2006
|
F-60
|
Notes
to Financial Statements
|
F-61
|
September
30,
|
September
30,
|
|||||||
2007
|
2006
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
|
$ |
137,000
|
$ |
8,000
|
||||
Accounts
receivable – less allowance for doubtful accounts of $338,000 and
$140,000, respectively
|
224,000
|
106,000
|
||||||
Due
from financial institution
|
134,000
|
431,000
|
||||||
Unbilled
receivables
|
1,182,000
|
945,000
|
||||||
Prepaid
expenses
|
268,000
|
216,000
|
||||||
Due
from related party
|
51,000
|
14,000
|
||||||
Total
current
assets
|
1,996,000
|
1,720,000
|
||||||
Property
and equipment, net
|
149,000
|
135,000
|
||||||
Other
assets
|
34,000
|
32,000
|
||||||
Intangible
assets, net
|
2,023,000
|
745,000
|
||||||
Goodwill
|
4,617,000
|
1,441,000
|
||||||
Total
assets
|
$ |
8,819,000
|
$ |
4,073,000
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable and accrued liabilities
|
$ |
1,348,000
|
$ |
1,293,000
|
||||
Accrued
wages and related obligations
|
1,367,000
|
1,178,000
|
||||||
Current
portion of long-term debt
|
691,000
|
431,000
|
||||||
Current
portion of related party long-term debt
|
1,647,000
|
473,000
|
||||||
Due
to related party
|
169,000
|
-
|
||||||
Total
current
liabilities
|
5,222,000
|
3,375,000
|
||||||
Long
term debt, net of current portion
|
450,000
|
665,000
|
||||||
Related
party long-term debt, net of current portion
|
2,440,000
|
45,000
|
||||||
Acquisition
related contingent liability
|
257,000
|
448,000
|
||||||
Total
liabilities
|
8,369,000
|
4,533,000
|
||||||
Commitments
and contingencies (Note 14)
|
||||||||
Stockholders’
equity (deficit)
|
||||||||
Preferred
stock, $0.0001 par value, 5,000,000 shares authorized; zero shares
issued
and outstanding
|
-
|
-
|
||||||
Common
stock, $0.0001 par value, 95,000,000 shares authorized; 17,469,000
and
12,759,000 shares issued and outstanding, respectively
|
2,000
|
1,000
|
||||||
Additional
paid-in capital
|
1,085,000
|
2,000
|
||||||
Accumulated
deficit
|
(637,000 | ) | (463,000 | ) | ||||
Total
stockholders’ equity
(deficit)
|
450,000
|
(460,000 | ) | |||||
Total
liabilities and
stockholders’ equity
|
$ |
8,819,000
|
$ |
4,073,000
|
||||
For
the Period
|
||||||||||||
June
9, 2005
|
||||||||||||
Year
Ended
|
(Date
of Inception) to
|
|||||||||||
September
30,
|
September
30,
|
September
30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||||
Revenue
|
$ |
57,581,000
|
$ |
34,088,000
|
$ |
-
|
||||||
Direct
cost of services
|
48,061,000
|
28,728,000
|
-
|
|||||||||
Gross
profit
|
9,520,000
|
5,360,000
|
-
|
|||||||||
Selling,
general and administrative expenses
|
8,478,000
|
5,116,000
|
91,000
|
|||||||||
Depreciation
and amortization
|
321,000
|
118,000
|
-
|
|||||||||
Income
(loss) from operations
|
721,000
|
126,000
|
(91,000 | ) | ||||||||
Interest
expense
|
895,000
|
498,000
|
-
|
|||||||||
Net
loss
|
$ | (174,000 | ) | $ | (372,000 | ) | $ | (91,000 | ) | |||
Basic
and diluted net loss per share
|
$ | (0.01 | ) | $ | (0.04 | ) | $ | (0.03 | ) | |||
Shares
used in basic and diluted per-share calculations
|
15,515,000
|
8,792,000
|
2,960,000
|
|||||||||
For
the Period
|
||||||||||||
June
9, 2005
|
||||||||||||
Year
Ended
|
(Date
of Inception) to
|
|||||||||||
September
30,
|
September
30,
|
September
30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
loss
|
$ | (174,000 | ) | $ | (372,000 | ) | $ | (91,000 | ) | |||
Adjustments
to reconcile net loss to cash provided by operating
activities:
|
||||||||||||
Depreciation
and amortization
|
321,000
|
118,000
|
-
|
|||||||||
Bad
debt expense
|
188,000
|
140,000
|
-
|
|||||||||
Stock-based
compensation
|
19,000
|
511,000
|
-
|
|||||||||
Amortization
of discount on long-term debt
|
7,000
|
-
|
-
|
|||||||||
Changes
in operating assets and liabilities, net of effect of
acquisitions:
|
||||||||||||
Trade
accounts receivable
|
(343,000 | ) | (833,000 | ) |
-
|
|||||||
Due
from financial institution
|
297,000
|
(431,000 | ) |
-
|
||||||||
Prepaid
expenses
|
15,000
|
(215,000 | ) |
-
|
||||||||
Due
from related party
|
(37,000 | ) | (14,000 | ) |
-
|
|||||||
Other
assets
|
(2,000 | ) | (32,000 | ) |
-
|
|||||||
Accounts
payable and accrued liabilities
|
327,000
|
1,396,000
|
92,000
|
|||||||||
Net
cash provided by operating activities
|
618,000
|
268,000
|
1,000
|
|||||||||
Cash
flows from investing activities:
|
||||||||||||
Purchase
of property and equipment
|
(69,000 | ) | (94,000 | ) | (1,000 | ) | ||||||
Acquisitions
|
(730,000 | ) | (247,000 | ) |
-
|
|||||||
Net
cash used in investing activities
|
(799,000 | ) | (341,000 | ) | (1,000 | ) | ||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
from issuance of long-term debt
|
275,000
|
-
|
-
|
|||||||||
Principal
payments on long-term debt
|
(289,000 | ) | (125,000 | ) |
-
|
|||||||
Proceeds
from issuance of long-term debt – related parties
|
384,000
|
311,000
|
-
|
|||||||||
Principal
payments on long-term debt – related parties
|
(590,000 | ) | (26,000 | ) |
-
|
|||||||
Payments
on contingent acquisition related liability
|
(191,000 | ) | (229,000 | ) |
-
|
|||||||
Proceeds
from issuance of common stock
|
721,000
|
150,000
|
-
|
|||||||||
Net
cash provided by financing activities
|
310,000
|
81,000
|
-
|
|||||||||
Change
in cash
|
129,000
|
8,000
|
-
|
|||||||||
Cash
at beginning of period
|
8,000
|
-
|
-
|
|||||||||
Cash
at end of period
|
$ |
137,000
|
$ |
8,000
|
$ |
-
|
||||||
Additional
|
Total
|
|||||||||||||||||||
Common
Stock
|
Paid-In
|
Accumulated
|
Stockholders’
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
(Deficit)
|
||||||||||||||||
Balances
as of June 9, 2005
|
2,960,000
|
$ |
-
|
$ | (1,765,000 | ) | $ |
-
|
$ | (1,765,000 | ) | |||||||||
Net
loss for the period June 9, 2005 to September 30, 2005
|
-
|
-
|
(91,000 | ) | (91,000 | ) | ||||||||||||||
Balances
as of September 30, 2005
|
2,960,000
|
-
|
(1,765,000 | ) | (91,000 | ) | $ | (1,856,000 | ) | |||||||||||
Issuances
in satisfaction of Humana Businesses’ liabilities
|
5,586,000
|
1,000
|
976,000
|
-
|
977,000
|
|||||||||||||||
Stock-based
compensation relating to restricted common stock
|
2,310,000
|
-
|
346,000
|
-
|
346,000
|
|||||||||||||||
Restricted
common stock issued for fees
|
1,300,000
|
-
|
166,000
|
-
|
166,000
|
|||||||||||||||
Issuance
of restricted common stock for assets
|
20,000
|
-
|
45,000
|
-
|
45,000
|
|||||||||||||||
Issuance
of restricted common stock for US Temps acquisition
|
310,000
|
-
|
85,000
|
-
|
85,000
|
|||||||||||||||
Note
conversion to restricted common stock
|
273,000
|
-
|
149,000
|
-
|
149,000
|
|||||||||||||||
Net
loss for the year ended September
30, 2006
|
-
|
-
|
(372,000 | ) | (372,000 | ) | ||||||||||||||
Balances
as of September 30, 2006
|
12,759,000
|
1,000
|
2,000
|
(463,000 | ) | (460,000 | ) | |||||||||||||
Issuances
in satisfaction of Humana Businesses’ liabilities
|
950,000
|
-
|
89,000
|
-
|
89,000
|
|||||||||||||||
Issuances
of restricted common stock
|
1,445,000
|
1,000
|
602,000
|
-
|
603,000
|
|||||||||||||||
Issuance
of restricted common stock with loan for purchase of
ReStaff
|
600,000
|
-
|
119,000
|
-
|
119,000
|
|||||||||||||||
Issuance
of restricted common stock for ReStaff acquisition
|
830,000
|
-
|
188,000
|
-
|
188,000
|
|||||||||||||||
Stock-based
compensation expense relating to restricted stock
|
585,000
|
-
|
19,000
|
-
|
19,000
|
|||||||||||||||
Restricted
stock issued for future services
|
300,000
|
-
|
66,000
|
-
|
66,000
|
|||||||||||||||
Net
loss for the year ended September
30, 2007
|
-
|
-
|
(174,000 | ) | (174,000 | ) | ||||||||||||||
Balances
as of September 30, 2007
|
17,469,000
|
$ |
2,000
|
$ |
1,085,000
|
$ | (637,000 | ) | $ |
450,000
|
||||||||||
Furniture
and Fixtures
|
3
years
|
Office
Equipment
|
3
years
|
Computer
Equipment
|
5
years
|
Software
|
3
years
|
Leasehold
Improvements
|
Term
of lease
|
Property
and equipment
|
$ |
5,000
|
||
Non-competition
agreement
|
80,000
|
|||
Accounts
receivable
|
200,000
|
|||
Customer
lists and relationships
|
1,461,000
|
|||
Goodwill
|
3,026,000
|
|||
Total
assets acquired
|
4,772,000
|
|||
Accrued
liabilities
|
62,000
|
|||
Total
purchase price
|
$ |
4,710,000
|
||
Accounts
receivable
|
$ |
358,000
|
||
Property
and equipment
|
25,000
|
|||
Customer
lists and relationships
|
168,000
|
|||
Non-solicitation
agreement
|
30,000
|
|||
Goodwill
|
1,335,000
|
|||
Total
assets acquired
|
1,916,000
|
|||
Accrued
liabilities
|
(193,000 | ) | ||
Total
purchase price
|
$ |
1,723,000
|
||
Year
Ended
September
30, 2007
|
Year
Ended
September
30, 2006
|
For
the Period from
June
9, 2005 (Date of Inception) to
September
30, 2005
|
||||||||||
Revenue
|
$ |
65,898,000
|
$ |
66,537,000
|
$ |
19,410,000
|
||||||
Net
(loss) income
|
$ | (342,000 | ) | $ | (232,000 | ) | $ |
136,000
|
||||
Basic
and diluted (loss) income per share
|
$ | (0.02 | ) | $ | (0.02 | ) | $ |
0.03
|
||||
As
of September 30, 2007
|
As
of September 30, 2006
|
|||||||||||||||||||||||
Accumulated
|
Accumulated
|
|||||||||||||||||||||||
Gross
|
Amortization
|
Net
|
Gross
|
Amortization
|
Net
|
|||||||||||||||||||
Customer
lists and relationships (7 years)
|
$ |
2,269,000
|
$ | (325,000 | ) | $ |
1,944,000
|
$ |
808,000
|
$ | (88,000 | ) | $ |
720,000
|
||||||||||
Non-competition
agreements (3 years)
|
110,000
|
(31,000 | ) |
79,000
|
30,000
|
(5,000 | ) |
25,000
|
||||||||||||||||
Total
|
$ |
2,379,000
|
$ | (356,000 | ) | $ |
2,023,000
|
$ |
838,000
|
$ | (93,000 | ) | $ |
745,000
|
||||||||||
Goodwill
(indefinite life)
|
$ |
4,617,000
|
$ |
4,617,000
|
$ |
1,441,000
|
$ |
1,441,000
|
||||||||||||||||
September
30,
|
September
30,
|
|||||||
2007
|
2006
|
|||||||
Furniture
and fixtures
|
$ |
106,000
|
$ |
92,000
|
||||
Office
equipment
|
19,000
|
9,000
|
||||||
Computer
equipment
|
77,000
|
41,000
|
||||||
Software
|
5,000
|
1,000
|
||||||
Leasehold
improvements
|
27,000
|
17,000
|
||||||
234,000
|
160,000
|
|||||||
Less
accumulated depreciation
|
85,000
|
25,000
|
||||||
$ |
149,000
|
$ |
135,000
|
|||||
September
30,
|
September
30,
|
|||||||
2007
|
2006
|
|||||||
Accrued
payroll and related costs
|
$ |
155,000
|
$ |
183,000
|
||||
Accrued
leased employee costs
|
1,212,000
|
995,000
|
||||||
$ |
1,367,000
|
$ |
1,178,000
|
|||||
September
30,
|
September
30,
|
|||||||
2007
|
2006
|
|||||||
Long-term
debt
|
||||||||
8%
subordinated note (i)
|
$ |
93,000
|
$ |
119,000
|
||||
3%
convertible subordinated note (ii)
|
527,000
|
631,000
|
||||||
Unsecured
note (iii)
|
80,000
|
80,000
|
||||||
Long
term capitalized consulting obligations (v)
|
159,000
|
266,000
|
||||||
10%
convertible subordinated note (xiii)
|
232,000
|
-
|
||||||
Other
debt
|
50,000
|
-
|
||||||
Total
|
1,141,000
|
1,096,000
|
||||||
Less
current maturities
|
691,000
|
431,000
|
||||||
Non-current
portion
|
450,000
|
665,000
|
||||||
Related
party long-term debt
|
||||||||
8%
unsecured demand note (iv)
|
101,000
|
135,000
|
||||||
Long
term capitalized consulting obligations (vi)
|
46,000
|
73,000
|
||||||
12%
unsecured convertible note (vii)
|
270,000
|
280,000
|
||||||
Demand
loan (viii)
|
30,000
|
30,000
|
||||||
6%
unsecured note (ix)
|
300,000
|
-
|
||||||
6%
unsecured note (x)
|
2,846,000
|
-
|
||||||
9%
unsecured note (xi)
|
210,000
|
-
|
||||||
Unsecured
loan (xii)
|
284,000
|
-
|
||||||
Total
|
4,087,000
|
518,000
|
||||||
Less
current maturities
|
1,647,000
|
473,000
|
||||||
Non-current
portion
|
2,440,000
|
45,000
|
||||||
Total
long-term debt
|
5,228,000
|
1,614,000
|
||||||
Less
current maturities
|
2,338,000
|
904,000
|
||||||
Total
non-current portion
|
$ |
2,890,000
|
$ |
710,000
|
||||
September
30,
|
September
30,
|
|||||||
2007
|
2006
|
|||||||
Deferred
tax assets:
|
||||||||
Net
operating losses
|
$ |
274,000
|
$ |
186,000
|
||||
Restricted
stock
|
7,000
|
-
|
||||||
Valuation
allowance
|
(255,000 | ) | (186,000 | ) | ||||
26,000
|
-
|
|||||||
Deferred
tax liabilities:
|
||||||||
Goodwill,
customer lists and relationships and non-compete and solicit
agreements
|
(26,000 | ) |
-
|
|||||
$ |
-
|
$ |
-
|
|||||
For
the Period
|
||||||||||||
June
9, 2005
|
||||||||||||
Year
Ended
|
(Date
of Inception) to
|
|||||||||||
September
30,
|
September
30,
|
September
30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||||
U.S.
Federal statutory rate
|
35 | % | 35 | % | 35 | % | ||||||
State
income taxes, net of federal benefit
|
5 | % | 5 | % | 5 | % | ||||||
Change
in valuation allowance
|
-40 | % | -40 | % | -40 | % | ||||||
Effective
tax rate
|
0 | % | 0 | % | 0 | % | ||||||
September
30,
|
September
30,
|
|||||||
2007
|
2006
|
|||||||
Cash
paid for interest
|
$ |
829,000
|
$ |
489,000
|
||||
Non-cash
investing and financing activities:
|
||||||||
ReStaff
Acquisition:
|
||||||||
Issuance
of restricted common stock
|
307,000
|
-
|
||||||
Restricted
common stock issued for future services
|
66,000
|
|||||||
Restricted
common stock issued to satisfy Humana Businesses’
liabilities
|
89,000
|
976,000
|
||||||
Stock-based
compensation
|
346,000
|
|||||||
Restricted
common stock issued for fees
|
166,000
|
|||||||
Note
conversion to restricted common stock
|
149,000
|
|||||||
US
Temp Acquisition:
|
||||||||
Issuance
of restricted common stock
|
85,000
|
|||||||
EXP
Acquisition:
|
||||||||
Issuance
of restricted common stock
|
45,000
|
|||||||
$ |
1,291,000
|
$ |
2,256,000
|
Years
Ending September 30:
|
Operating
Leases
|
|||
2008
|
$ |
443,000
|
||
2009
|
405,000
|
|||
2010
|
275,000
|
|||
2011
|
212,000
|
|||
2012
|
212,000
|
|||
Thereafter
|
636,000
|
|||
$ |
2,183,000
|
|||
First
|
Second
|
Third
|
Fourth
|
|||||||||||||
Fiscal
Year 2007
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
||||||||||||
Revenue
|
$ |
11,909,000
|
$ |
12,560,000
|
$ |
16,241,000
|
$ |
16,871,000
|
||||||||
Direct
cost of services
|
10,072,000
|
10,447,000
|
13,410,000
|
14,132,000
|
||||||||||||
Gross
profit
|
1,837,000
|
2,113,000
|
2,831,000
|
2,739,000
|
||||||||||||
Selling,
general and administrative expenses
|
1,661,000
|
1,972,000
|
2,493,000
|
2,352,000
|
||||||||||||
Depreciation
and amortization
|
43,000
|
65,000
|
106,000
|
107,000
|
||||||||||||
Income
from operations
|
133,000
|
76,000
|
232,000
|
280,000
|
||||||||||||
Interest
expense
|
205,000
|
182,000
|
246,000
|
262,000
|
||||||||||||
Net
(loss) income
|
$ | (72,000 | ) | $ | (106,000 | ) | $ | (14,000 | ) | $ |
18,000
|
|||||
Net
(loss) income per common share:
|
||||||||||||||||
Basic
and diluted
|
$ | (0.01 | ) | $ | (0.01 | ) | $ |
0.00
|
$ |
0.00
|
||||||
First
|
Second
|
Third
|
Fourth
|
|||||||||||||
Fiscal
Year 2006
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
||||||||||||
Revenue
|
$ |
2,758,000
|
$ |
6,546,000
|
$ |
12,196,000
|
$ |
12,588,000
|
||||||||
Direct
cost of services
|
2,360,000
|
5,433,000
|
10,304,000
|
10,631,000
|
||||||||||||
Gross
profit
|
398,000
|
1,113,000
|
1,892,000
|
1,957,000
|
||||||||||||
Selling,
general and administrative expenses
|
364,000
|
1,531,000
|
1,629,000
|
1,592,000
|
||||||||||||
Depreciation
and amortization
|
9,000
|
27,000
|
41,000
|
41,000
|
||||||||||||
Income
(loss) from operations
|
25,000
|
(445,000 | ) |
222,000
|
324,000
|
|||||||||||
Interest
expense
|
12,000
|
86,000
|
192,000
|
208,000
|
||||||||||||
Net
income (loss)
|
$ |
13,000
|
$ | (531,000 | ) | $ |
30,000
|
$ |
116,000
|
|||||||
Net
income (loss) per common share:
|
||||||||||||||||
Basic
and diluted
|
$ |
0.00
|
$ | (0.06 | ) | $ |
0.00
|
$ |
0.01
|
SEPTEMBER
30,
|
||||||||
2005
|
2004
|
|||||||
Assets
sold:
|
||||||||
Deposits
|
$ |
5,953
|
$ |
3,693
|
||||
Property
and equipment,
net
|
16,614
|
6,746
|
||||||
Liabilities
transferred
|
-
|
-
|
||||||
Net
assets sold
|
$ |
22,567
|
$ |
10,439
|
YEARS
ENDED
|
||||||||
SEPTEMBER
30,
|
||||||||
2005
|
2004
|
|||||||
Net
revenues
|
$ |
17,010,917
|
$ |
16,362,898
|
||||
Direct
cost of services
|
15,135,181
|
14,988,747
|
||||||
Gross
profit
|
1,875,736
|
1,374,051
|
||||||
Expenses:
|
||||||||
Compensation
and related
expenses
|
756,172
|
599,664
|
||||||
General
and administrative
expenses
|
636,214
|
596,909
|
||||||
Depreciation
and
amortization
|
3,956
|
2,562
|
||||||
Total
expenses
|
1,396,342
|
1,199,135
|
||||||
Gross
Profit in excess of expenses
|
$ |
479,394
|
$ |
174,916
|
Furniture
and fixtures
|
3
years
|
Office
Equipment
|
3
years
|
Computer
Equipment
|
5
years
|
Software
|
3
years
|
Leasehold
Improvements
|
Term
of lease
|
SEPTEMBER
30,
|
||||||||
2005
|
2004
|
|||||||
Property
and equipment
|
$ |
22,235
|
$ |
9,806
|
||||
Leasehold
improvements
|
1,412
|
1,412
|
||||||
23,647
|
11,218
|
|||||||
Less
accumulated depreciation and amortization
|
(7,033 | ) | (4,472 | ) | ||||
Property
and equipment, net
|
$ |
16,614
|
$ |
6,746
|
||||
Years
Ending September 30,
|
||||
2006
|
$ |
51,000
|
||
2007
|
19,000
|
|||
Total
|
$ |
70,000
|
||
For
the Two
|
For
the Three
|
|||||||
Months
Ended
|
Months
Ended
|
|||||||
November
28, 2005
|
December
31, 2004
|
|||||||
Net
revenues
|
$ |
3,480,163
|
$ |
3,853,744
|
||||
Direct
cost of services
|
3,059,013
|
3,431,182
|
||||||
Gross
profit
|
421,150
|
422,182
|
||||||
Expenses:
|
||||||||
Compensation
and related
expenses
|
90,825
|
193,769
|
||||||
General
and administrative
expenses
|
119,618
|
127,251
|
||||||
Depreciation
and
amortization
|
1,073
|
1,281
|
||||||
Total
expenses
|
211,516
|
322,301
|
||||||
Gross
profit in excess of expenses
|
$ |
209,634
|
$ |
99,881
|
||||
DECEMBER
31,
|
||||||||
2006
|
2005
|
|||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
|
$ |
128,614
|
$ |
104,362
|
||||
Accounts
receivable – less
allowance for doubtful accounts of
|
||||||||
$113,882
and $68,870,
respectively
|
236,117
|
-
|
||||||
Due
from financial
institution
|
789,621
|
619,832
|
||||||
Due
from related
party
|
148,895
|
-
|
||||||
Total
current
assets
|
1,303,247
|
724,194
|
||||||
Property
and equipment, net
|
13,333
|
17,333
|
||||||
Intangible
assets, net
|
777,423
|
927,189
|
||||||
Goodwill
|
3,459,867
|
3,459,867
|
||||||
Total
assets
|
$ |
5,553,870
|
$ |
5,128,583
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable and accrued
liabilities
|
$ |
27,285
|
$ |
6,210
|
||||
Accrued
interest
|
565,059
|
171,133
|
||||||
Accrued
wages and related
obligations
|
248,098
|
279,229
|
||||||
Current
portion of long-term
debt
|
1,575,000
|
575,000
|
||||||
Due
to related
party
|
-
|
44,056
|
||||||
Total
current
liabilities
|
2,415,442
|
1,075,628
|
||||||
Long-term
debt, net of current
portion
|
3,000,000
|
4,000,000
|
||||||
Commitments
|
5,415,442
|
5,075,628
|
||||||
Stockholders’
Equity:
|
||||||||
Common
stock - $.01 par value,
1,000 shares issued and outstanding
|
||||||||
As
of December 31, 2006 and 2005,
respectively
|
10
|
10
|
||||||
Retained
earnings
|
138,418
|
52,945
|
||||||
Total
stockholders’
equity
|
138,428
|
52,955
|
||||||
Total
liabilities and
stockholders’ equity
|
$ |
5,553,870
|
$ |
5,128,583
|
||||
PERIOD
FROM
|
||||||||
APRIL
12, 2005
|
||||||||
(DATE
OF
|
||||||||
YEAR
ENDED
|
INCEPTION)
TO
|
|||||||
DECEMBER
31, 2006
|
DECEMBER
31, 2005
|
|||||||
Revenue
|
$ |
19,287,149
|
$ |
10,413,398
|
||||
Direct
cost of services
|
16,529,445
|
8,949,746
|
||||||
Gross
profit
|
2,757,704
|
1,463,652
|
||||||
Selling,
general and administrative expenses
|
1,818,207
|
946,057
|
||||||
Depreciation
and amortization
|
153,766
|
102,511
|
||||||
Income
from operations
|
785,731
|
415,084
|
||||||
Interest
expense
|
700,258
|
362,139
|
||||||
Net
income
|
$ |
85,473
|
$ |
52,945
|
PERIOD
FROM
|
||||||||
APRIL
12, 2005
|
||||||||
(DATE
OF
|
||||||||
YEAR
ENDED
|
INCEPTION)
TO
|
|||||||
DECEMBER
31, 2006
|
DECEMBER
31, 2005
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ |
85,473
|
$ |
52,945
|
||||
Adjustments
to reconcile net
income to cash provided by
|
||||||||
operating
activities:
|
||||||||
Depreciation
and
amortization
|
153,766
|
102,511
|
||||||
Bad
debt expense
|
45,012
|
68,870
|
||||||
Common
stock issued for
services
|
-
|
10
|
||||||
Changes
in operating assets and
liabilities:
|
||||||||
Trade
accounts
receivable
|
(281,129 | ) |
-
|
|||||
Due
from financial
institution
|
(169,789 | ) | (620,602 | ) | ||||
Accounts
payable and accrued
liabilities
|
383,870
|
456,572
|
||||||
Net
cash provided by operating activities
|
217,203
|
60,306
|
||||||
Cash
flows from financing activities:
|
||||||||
Due
from related
party
|
(192,951 | ) |
44,056
|
|||||
Net
cash provided by (used in) financing activities
|
(192,951 | ) |
44,056
|
|||||
Change
in cash
|
24,252
|
104,362
|
||||||
Cash,
beginning of period
|
104,362
|
-
|
||||||
Cash,
end of period
|
$ |
128,614
|
$ |
104,362
|
||||
Supplemental
cash flow information:
|
||||||||
Cash
paid for
interest
|
$ |
306,332
|
$ |
191,006
|
||||
Non-cash
financing activities:
|
||||||||
Acquisition
of Staffing.Com, Inc.
for note payable
|
$ |
-
|
$ |
4,575,000
|
||||
COMMON
STOCK
|
ACCUMULATED
|
|||||||||||||||
SHARES
|
AMOUNT
|
EARNINGS
|
TOTAL
|
|||||||||||||
Date
of inception, April 12, 2005
|
-
|
$ |
-
|
$ |
-
|
$ |
-
|
|||||||||
Shares
issued for services
|
1,000
|
10
|
-
|
10
|
||||||||||||
Net
income
|
52,945
|
52,945
|
||||||||||||||
Balance
at December 31, 2005
|
1,000
|
10
|
52,945
|
52,945
|
||||||||||||
Net
income
|
85,473
|
85,473
|
||||||||||||||
Balance
at December 31, 2006
|
1,000
|
$ |
10
|
$ |
138,418
|
$ |
138,428
|
|||||||||
Furniture
and fixtures
|
7
years
|
Office
Equipment
|
7
years
|
Computer
Equipment
|
5
years
|
Accounts
receivable
|
$ |
68,100
|
||
Property
and
equipment
|
20,000
|
|||
Customer
lists and
relationships
|
973,710
|
|||
Non-competition
agreement
|
53,323
|
|||
Goodwill
|
3,459,867
|
|||
Total
assets
acquired
|
$ |
4,575,000
|
December
31, 2006
|
December
31, 2005
|
|||||||||||||||||||||||
Accumulated
|
Accumulated
|
|||||||||||||||||||||||
Gross
|
Amortization
|
Net
|
Gross
|
Amortization
|
Net
|
|||||||||||||||||||
Customer
lists and relationships (7 years)
|
$ |
973,710
|
$ | (231,832 | ) | $ |
741,878
|
$ |
973,710
|
$ | (92,734 | ) | $ |
880,976
|
||||||||||
Non-competition
agreement (5 years)
|
53,323
|
(17,778 | ) |
35,545
|
53,323
|
(7,110 | ) |
46,213
|
||||||||||||||||
$ |
1,027,033
|
$ | (249,610 | ) | $ |
777,423
|
$ |
1,027,033
|
$ | (99,844 | ) | $ |
927,189
|
|||||||||||
Goodwill
(indefinite life)
|
$ |
3,459,867
|
$ |
3,459,867
|
$ |
3,459,867
|
$ |
3,459,867
|
2006
|
2005
|
|||||||
Furniture
and fixtures
|
$ |
2,000
|
$ |
2,000
|
||||
Office
Equipment
|
2,000
|
2,000
|
||||||
Computer
Equipment
|
16,000
|
16,000
|
||||||
20,000
|
20,000
|
|||||||
Less:
accumulated depreciation
and amortization
|
6,667
|
2,667
|
||||||
$ |
13,333
|
$ |
17,333
|
Years
Ending December 31:
|
Operating
Leases
|
|||
2007
|
$ |
37,168
|
||
2008
|
38,092
|
|||
2009
|
39,016
|
|||
2010
|
13,108
|
|||
$ |
127,384
|
For
the Two
Months
Ended
February
26, 2007
|
For
the Three
Months
Ended
March
31, 2006
|
|||||||
Revenue
|
$ |
2,974,844
|
$ |
4,077,074
|
||||
Direct
cost of services
|
2,518,689
|
3,489,681
|
||||||
Gross
profit
|
456,155
|
587,393
|
||||||
Selling,
general and administrative expenses
|
416,513
|
358,840
|
||||||
Depreciation
and amortization
|
25,070
|
38,442
|
||||||
Income
from operations
|
14,572
|
190,111
|
||||||
Interest
expense
|
130,330
|
153,184
|
||||||
Net
(loss) income
|
$ | (115,758 | ) | $ |
36,927
|
|||
For
the Two
Months
Ended
February
26, 2007
|
For
the Three
Months
Ended
March
31, 2006
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
(loss) income
|
$ | (115,758 | ) | $ |
36,927
|
|||
Adjustments
to reconcile net (loss) income to cash provided by operating
activities:
|
||||||||
Depreciation
and
amortization
|
25,069
|
38,443
|
||||||
Bad
debts expense
|
150,000
|
13,155
|
||||||
Changes
in operating assets and
liabilities:
|
||||||||
Trade
accounts
receivable
|
24,537
|
(97,321 | ) | |||||
Due
from financial
institution
|
213,590
|
(34,237 | ) | |||||
Accounts
payable and accrued
liabilities
|
(79,051 | ) |
166,546
|
|||||
Net
cash provided by operating
activities
|
218,387
|
123,513
|
||||||
Cash
flows from financing activities:
|
||||||||
Due
from related
party
|
(199,324 | ) | (18,914 | ) | ||||
Net
cash used in financing
activities
|
(199,324 | ) | (18,914 | ) | ||||
Change
in cash
|
19,063
|
104,599
|
||||||
Cash
at beginning of period
|
128,614
|
104,362
|
||||||
Cash
at end of period
|
$ |
147,677
|
$ |
208,961
|
||||
Supplemental
cash flow information:
|
||||||||
Cash
paid for
interest
|
$ |
61,796
|
$ |
62,938
|
||||
Non-cash
financing activities:
|
||||||||
Default
and conversion of note and accrued interest for common stock held
by sole
shareholder
|
$ |
5,208,593
|
$ |
-
|
||||
Additional
|
||||||||||||||||||||
Common
Stock
|
Paid-in
|
Accumulated
|
||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Total
|
||||||||||||||||
Balance
at December 31, 2006
|
1,000
|
$ |
10
|
$ |
-
|
$ |
138,418
|
$ |
138,428
|
|||||||||||
Default
and conversion of note and accrued interest in exchange for common
stock
held by sole shareholder
|
5,208,593
|
5,208,593
|
||||||||||||||||||
Net
loss
|
(115,758 | ) | (115,758 | ) | ||||||||||||||||
Balance
at February 26, 2007
|
1,000
|
$ |
10
|
$ |
5,208,593
|
$ |
22,660
|
$ |
5,231,263
|
Historical
|
Historical
|
Pro
Forma
|
Pro
Forma
|
|||||||||||||
Accountabilities
|
ReStaff
|
Adjustments
|
Combined
|
|||||||||||||
Revenues
|
$ |
57,581,000
|
$ |
8,317,000
|
$ |
-
|
$ |
65,898,000
|
||||||||
Direct
cost of services
|
48,061,000
|
7,099,000
|
-
|
55,160,000
|
||||||||||||
Gross
profit
|
9,520,000
|
1,218,000
|
-
|
10,738,000
|
||||||||||||
Selling,
general and administrative expenses
|
8,478,000
|
1,040,000
|
-
|
9,518,000
|
||||||||||||
Depreciation
and amortization
|
321,000
|
64,000
|
36,000 | (a) |
421,000
|
|||||||||||
Income
from operations
|
721,000
|
114,000
|
(36,000 | ) |
799,000
|
|||||||||||
Interest
expense
|
895,000
|
325,000
|
(79,000 | )(b) |
1,141,000
|
|||||||||||
Net
loss
|
$ | (174,000 | ) | $ | (211,000 | ) | $ |
43,000
|
$ | (342,000 | ) | |||||
Accounts
Receivable
|
$ |
200,000
|
||
Property
and Equipment
|
5,000
|
|||
Customer
lists and relationships
|
1,461,000
|
|||
Non-competition
agreement
|
80,000
|
|||
Goodwill
|
3,026,000
|
|||
Total
assets
acquired
|
4,772,000
|
|||
Accrued
liabilities
|
(62,000 | ) | ||
Net
assets
acquired
|
$ |
4,710,000
|
December
31,
|
||||||||
2005
|
2004
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
|
$ |
167,711
|
36,630
|
|||||
Accounts
receivable – less allowance for doubtful accounts of $200,000 and $50,000,
respectively
|
248,372
|
156,801
|
||||||
Due
from financial institution
|
351,759
|
410,978
|
||||||
Unbilled
receivables
|
360,325
|
300,888
|
||||||
Prepaid
expenses
|
142,129
|
118,553
|
||||||
Due
from related party
|
10,773
|
14,179
|
||||||
Total
current
assets
|
1,281,069
|
1,038,029
|
||||||
Property
and equipment, net
|
17,780
|
19,183
|
||||||
Other
assets
|
11,370
|
9,599
|
||||||
Intangible
assets, net
|
97,242
|
121,326
|
||||||
Goodwill
|
209,352
|
209,352
|
||||||
Total
assets
|
$ |
1,616,813
|
$ |
1,397,489
|
||||
LIABILITIES
AND STOCKHOLDERS’ DEFICIT
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable and accrued liabilities
|
$ |
1,100,221
|
$ |
554,974
|
||||
Accrued
wages and related obligations
|
128,187
|
223,209
|
||||||
Current
portion of long-term debt
|
726,225
|
730,612
|
||||||
Total
current
liabilities
|
1,954,633
|
1,508,795
|
||||||
Long
term debt, net of current portion
|
277,564
|
257,712
|
||||||
Total
liabilities
|
2,232,197
|
1,766,507
|
||||||
Commitments
|
||||||||
Stockholders’
deficit
|
||||||||
Common
stock, no par value, 25,000 shares authorized; 4,000 and
12,000
issued
and outstanding as of December 31, 2005 and 2004,
respectively
|
4,200
|
3,400
|
||||||
Accumulated
deficit
|
(619,584 | ) | (372,418 | ) | ||||
Total
stockholders’
deficit
|
(615,384 | ) | (369,018 | ) | ||||
Total
liabilities and
stockholders’ deficit
|
$ |
1,616,813
|
$ |
1,397,489
|
Year
Ended December 31,
|
||||||||
2005
|
2004
|
|||||||
Revenue
|
$ |
22,181,088
|
$ |
19,104,310
|
||||
Direct
cost of services
|
19,756,798
|
17,245,373
|
||||||
Gross
profit
|
2,424,290
|
1,858,937
|
||||||
Selling,
general and administrative expenses
|
2,310,897
|
1,640,272
|
||||||
Depreciation
and amortization
|
28,099
|
27,207
|
||||||
Income
from operations
|
85,294
|
191,458
|
||||||
Interest
expense
|
332,460
|
397,627
|
||||||
Net
loss
|
$ | (247,166 | ) | $ | (206,169 | ) | ||
Years
Ended December 31,
|
||||||||
2005
|
2004
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (247,166 | ) | $ | (206,169 | ) | ||
Adjustments
to reconcile net loss to cash (used in) provided by operating
activities:
|
||||||||
Depreciation
and
amortization
|
28,099
|
27,206
|
||||||
Bad
debts expense
|
155,563
|
50,000
|
||||||
Common
stock issues for
services
|
800
|
|||||||
Changes
in operating assets and
liabilities:
|
||||||||
Trade
accounts
receivable
|
(306,571 | ) | (348,277 | ) | ||||
Due
from financial
institution
|
59,219
|
50,773
|
||||||
Prepaid
expenses
|
(23,576 | ) | (105,832 | ) | ||||
Due
from related
party
|
3,406
|
(58,051 | ) | |||||
Other
assets
|
(1,771 | ) |
58,728
|
|||||
Accounts
payable and accrued
liabilities
|
514,960
|
(4,333 | ) | |||||
Net
cash (used in) provided by
operating activities
|
182,963
|
(535,955 | ) | |||||
Cash
flows from investing activities:
|
||||||||
Purchase
of property and
equipment
|
(2,612 | ) | (7,731 | ) | ||||
Net
cash used in investing
activities
|
(2,612 | ) | (7,731 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from issuance of
long-term debt
|
575,000
|
|||||||
Principal
payments on long-term
debt
|
(49,270 | ) | (144,541 | ) | ||||
Net
cash (used in) provided by
financing activities
|
(49,270 | ) |
430,459
|
|||||
Change
in cash
|
131,081
|
(113,227 | ) | |||||
Cash
at beginning of year
|
36,630
|
149,857
|
||||||
Cash
at end of year
|
$ |
167,711
|
$ |
36,630
|
||||
Supplemental
cash flow information:
|
||||||||
Cash
paid for
interest
|
$ |
273,725
|
$ |
332,409
|
||||
Common
Stock
|
Accumulated
|
|||||||||||||||
Shares
|
Amount
|
Deficit
|
Total
|
|||||||||||||
Balance
at December 31, 2003
|
4,000
|
$ |
3,400
|
$ | (166,249 | ) | $ | (162,849 | ) | |||||||
Net
loss
|
(206,169 | ) | (206,169 | ) | ||||||||||||
Balance
at December 31, 2004
|
4,000
|
3,400
|
(372,418 | ) | (369,018 | ) | ||||||||||
Net
loss
|
(247,166 | ) | (247,166 | ) | ||||||||||||
Shares
issued for services
|
8,000
|
800
|
800
|
|||||||||||||
Balance
at December 31, 2005
|
12,000
|
$ |
4,200
|
$ | (619,584 | ) | $ | (615,384 | ) | |||||||
Furniture
and fixtures
|
7
years
|
Office
Equipment
|
7
years
|
Computer
Equipment
|
5
years
|
December
31, 2005
|
December
31, 2004
|
|||||||||||||||||||||||
Accumulated
|
Accumulated
|
|||||||||||||||||||||||
Gross
|
Amortization
|
Net
|
Gross
|
Amortization
|
Net
|
|||||||||||||||||||
Customer
lists and relationships (7 years)
|
$ |
168,585
|
$ | (71,343 | ) | $ |
97,242
|
$ |
168,585
|
$ | (47,259 | ) | $ |
121,326
|
||||||||||
Goodwill
(indefinite life)
|
$ |
209,352
|
$ |
209,352
|
$ |
209,352
|
$ |
209,352
|
2005
|
2004
|
|||||||
Furniture
and fixtures
|
$ |
6,182
|
$ |
6,182
|
||||
Office
Equipment
|
43,179
|
40,567
|
||||||
Computer
Equipment
|
1,077
|
1,077
|
||||||
50,438
|
47,826
|
|||||||
Less
accumulated depreciation
and amortization
|
32,658
|
28,643
|
||||||
$ |
17,780
|
$ |
19,183
|
2005
|
2004
|
|||||||
10%
unsecured, convertible, demand revolving credit facility
(i)
|
$ |
650,921
|
$ |
634,112
|
||||
4%
unsecured note, due through 2010 (ii)
|
259,865
|
250,559
|
||||||
6%
unsecured note, due through 2006 (iii)
|
6,298
|
9,480
|
||||||
6%
unsecured note, due through 2008 (iv)
|
84,214
|
91,827
|
||||||
Other
|
2,491
|
2,346
|
||||||
Total
|
1,003,789
|
988,324
|
||||||
Less
current
maturities
|
726,225
|
730,612
|
||||||
Noncurrent
portion
|
$ |
277,564
|
$ |
257,712
|
Year
Ended
|
||||||||
2005
|
2004
|
|||||||
Statutory
federal income tax benefit
|
$ | (86,508 | ) | $ | (72,159 | ) | ||
State
taxes, net of federal benefit
|
(12,358 | ) | (10,308 | ) | ||||
Valuation
allowance
|
98,866
|
82,468
|
||||||
$ |
-
|
$ |
-
|
Years
Ending December 31:
|
Operating
Leases
|
|||
2006
|
$ |
69,303
|
||
2007
|
32,814
|
|||
2008
|
18,223
|
|||
$ |
120,340
|
For
the Three Months Ended
|
||||||||
March
31,
|
||||||||
2006
|
2005
|
|||||||
Revenue
|
$ |
5,057,295
|
$ |
2,110,753
|
||||
Direct
cost of services
|
4,453,367
|
1,877,650
|
||||||
Gross
profit
|
603,928
|
233,103
|
||||||
Selling,
general and administrative expenses
|
735,501
|
202,128
|
||||||
Depreciation
and amortization
|
7,058
|
6,334
|
||||||
Income
(loss) from operations
|
(138,631 | ) |
24,641
|
|||||
Interest
expense
|
91,264
|
27,211
|
||||||
Net
loss
|
$ | (229,895 | ) | $ | (2,570 | ) | ||
For
the Three Months Ended
|
||||||||
March
31,
|
||||||||
2006
|
2005
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (229,895 | ) | $ | (2,570 | ) | ||
Adjustments
to reconcile net loss to cash provided by operating
activities:
|
||||||||
Depreciation
and
amortization
|
7,060
|
6,960
|
||||||
Bad
debts expense
|
188,512
|
15,000
|
||||||
Changes
in operating assets and
liabilities:
|
||||||||
Trade
accounts
receivable
|
(14,386 | ) | (184,463 | ) | ||||
Due
from financial
institution
|
63,337
|
88,354
|
||||||
Prepaid
expenses
|
5,105
|
(10,373 | ) | |||||
Due
from related
party
|
-
|
8,186
|
||||||
Other
assets
|
-
|
(1,771 | ) | |||||
Accounts
payable and accrued
liabilities
|
11,108
|
166,907
|
||||||
Net
cash provided by operating
activities
|
30,841
|
86,230
|
||||||
Cash
flows from financing activities:
|
||||||||
Principal
payments on long-term
debt
|
(6,480 | ) | (7,227 | ) | ||||
Net
cash used in financing
activities
|
(6,480 | ) | (7,227 | ) | ||||
Change
in cash
|
24,361
|
79,003
|
||||||
Cash
at beginning of period
|
167,711
|
36,630
|
||||||
Cash
at end of period
|
$ |
192,072
|
$ |
115,633
|
||||
Supplemental
cash flow information:
|
||||||||
Cash
paid for
interest
|
$ |
70,536
|
$ |
13,511
|
||||
Common
Stock
|
Accumulated
|
|||||||||||||||
Shares
|
Amount
|
Deficit
|
Total
|
|||||||||||||
Balance
at December 31, 2005
|
12,000
|
$ |
4,200
|
$ | (619,584 | ) | $ | (615,384 | ) | |||||||
Net
loss
|
(229,895 | ) | (229,895 | ) | ||||||||||||
Balance
at March 31, 2006
|
12,000
|
$ |
4,200
|
$ | (849,479 | ) | $ | (845,279 | ) |