SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB /A
Amendment 1
(Mark One)
ý Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2004.
o Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to ..
Commission file number: 000-25523
PRIMARY BUSINESS SYSTEM INC.
(Exact name of small business issuer as specified in its charter)
NEVADA | 86-0857752 |
(State or other jurisdiction of
incorporation or organization) | (I.R.S. Employer
Identification No.) |
433 Kitty Hawk Drive # 226, Universal City, Texas 73148
(Address of principal executive office) (Zip Code)
(210) 658-4675
(Issuer’s telephone number)
Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
The number of outstanding shares of the issuer’s common stock, $0.001 par value (the only class of voting stock), as of June 30, 2004 and August 9, 2004 was 86,278,297
Transitional Small Business Disclosure Format | Yes o | No ý |
This amendment is filed solely to correct a typographical error which appears in the
Unaudited Consolidated Condensed Interim Statements Of Cash Flow
For The Six Months Ended June 30, 2004 and 2003, which incorrectly states net cash provided by (used in) financing activities as $49,662 and should read ($13,699).
Table of Contents
Part I
As used herein, the term “Company” refers to Primary Business Systems Inc., a Nevada corporation, and its subsidiaries and predecessors unless otherwise indicated. Unaudited consolidated condensed interim financial statements including a balance sheet for the Company as of the quarter ended June 30, 2004 and statements of operations, and statements of cash flows for the interim period up to the date of such balance sheet and the comparable period of the preceding year for the statement of operations are attached hereto as of Pages F-1 through F-9 and are incorporated herein by this reference.
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions for Form 10-QSB and Item 310 under subpart A of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying statements should be read in conjunction with the audited financial statements for the years ended December 31, 2003 and December 31, 2002. In the opinion of management, all adjustments (consisting only of normal occurring accruals) considered necessary in order to make the financial statements not misleading have been included. Operating results for the three and six months ended June 30, 2004 are not necessarily indicative of results that may be expected for the year ended December 31, 2004. The financial statements are presented on the accrual basis with significant intercompany transactions and balances eliminated.
F-1
Primary Business System, Inc.
Financial Statements
June 30, 2004
Primary Business Systems Inc.
& Subsidiaries
Index
Unaudited Consolidated Condensed Interim Financial Statements
For the Period Ended
June 30, 2004
F-2
PRIMARY BUSINESS SYSTEMS, INC.
And SUBSIDIARIES
Consolidated Balance Sheet
As of December 31, 2003 (Audited) and June 30, 2004 (Unaudited)
ASSETS | | December 31, 2003 | | June 30, 2004 | |
Current assets | | | | | |
Cash | | $ | 19,845 | | $ | 34,798 | |
Notes receivable | | 46,007 | | 61,549 | |
Client accounts receivable | | 70,589 | | 70,095 | |
Prepaid Expenses | | 73,186 | | 30,790 | |
Workers Compensation Prepaid Premiums | | 96,097 | | 96,097 | |
| | | | | |
Total Current Assets | | 305,724 | | 293,329 | |
| | | | | |
Property & Equipment | | | | | |
Furniture & Fixtures | | 52,244 | | 52,244 | |
Computer equipment | | 84,300 | | 84,3000 | |
Payroll software | | 43,724 | | 43,724 | |
| | | | | |
Less: accumulated depreciation | | 180,269 | | 180,269 | |
| | | | | |
| | (119,153 | ) | (133,784 | ) |
Total Property & Equipment | | 61,116 | | 46,520 | |
| | | | | |
Other assets | | | | | |
Security Deposits | | 1,054 | | 1,055 | |
Customer list, net of amortization | | 11,400 | | 10,200 | |
Prepaid marketing | | 0 | | 0 | |
Goodwill | | 557,240 | | 557,240 | |
Total Other Assets | | 569,694 | | 569,094 | |
Total Assets | | $ | 936,534 | | $ | 908,344 | |
The accompanying notes are an integral part of these financial statements.
F-3
PRIMARY BUSINESS SYSTEMS, INC.
& SUBSIDIARIES
Consolidated Balance Sheet Continued
As of December 31, 2003 (audited) and June 30, 2004 (unaudited
LIABILITIES | | December 31,
2003 | | June 30, 2004 | |
Current liabilities | | | | | |
Accounts payable | | $ | 214,656 | | $ | 122,402 | |
Checks drawn on uncollected payrolls | | 69,160 | | 60,037 | |
Deferred revenue on payrolls | | 0 | | 45,934 | |
Client Payroll Tax payable | | 20,024 | | 192,626 | |
Workers Comp payable | | 45,139 | | 54,647 | |
Client payroll amount withheld | | 16,477 | | 1,205 | |
Notes Payable | | 20,973 | | 63,362 | |
Line of credit from banks | | 44,988 | | 52,436 | |
Total Current Liabilities | | 431,416 | | 592,649 | |
| | | | | |
Other liabilities | | | | | |
Due to shareholder/officer | | 628,023 | | 627,859 | |
Total Liabilities | | 1,059,448 | | 1,220,508 | |
Stockholders’ Equity | | | | | |
Common stock, - $.001 par value authorized - 750,000,000 shares | | | | | |
Issued and outstanding 85,657,747 | | 85,750 | | 85,750 | |
Additional paid-in capital | | 976,870 | | 976,870 | |
accumulated (deficit) | | (1,185,534 | ) | (1,347,782 | ) |
Total Stockholders’ Equity | | (122,914 | ) | (312,164 | ) |
Total liabilities and Stockholder’s Equity | | $ | 936,534 | | $ | 908,343 | |
The accompanying notes are an integral part of theses financial statements.
F-4
PRIMARY BUSINESS SYSTEMS, INC.
And SUBSIDIARIES
Unaudited Consolidated Condensed Interim Statement of Operations
For the Three Months and Six Months Ended June 30, 2004 and 2003
| | Three Months Ended June 30 | | Six Months Ended June 30 | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Revenues | | $ | 786,631 | | $ | 704,233 | | $ | 1,332,829 | | $ | 1,338,665 | |
Cost of revenues | | 482,265 | | 475,329 | | 855,278 | | 975,963 | |
Gross Profit | | 300,366 | | 228,904 | | 477,542 | | 362,702 | |
Operating Expenses | | | | | | | | | |
General and Administrative | | 202,386 | | 147,370 | | 386,273 | | 245,932 | |
Wages, commissions & salaries | | 153,962 | | 140,499 | | 280,519 | | 200,481 | |
Consulting services for acquisition | | 0 | | (110,000 | ) | | | 75,000 | |
Total Operating Expenses | | 356,348 | | 177,869 | | 666,792 | | 521,413 | |
(Loss) from Operations | | (55,982 | ) | 51,035 | | (189,250 | ) | (158,711 | ) |
Other Income | | 0 | | 498 | | 0 | | 2,934 | |
(Loss Before Prevision For Income Tax) | | (55,982 | ) | 51,533 | | (189,250 | ) | (155,777 | ) |
Provision for Income Taxes | | — | | — | | | | | |
Net (Loss) | | $ | (55,982 | ) | $ | 51,533 | | (189,250 | ) | (155,777 | ) |
| | | | | | | | | |
Basic & Distributed Net (Loss) Per Share | | 0.00 | | 0.00 | | 0.00 | | 0.00 | |
Basic and Distributed Weighted Average Shares Outstanding | | 86,278,297 | | 62,196,587 | | 86,278,297 | | 62,169,587 | |
| | | | | | | | | | | | | |
The Accompanying notes are an integral part of these financial statements.
F-5
PRIMARY BUSINESS SYSTEMS, INC.
& SUBSIDUARIES
Unaudited Consolidated Condensed Interim
Statements of Cash Flow
For the Six Months Ended June 30, 2004 and 2003
| | For the Six Months Ending June 30 | |
| | 2004 | | 2003 | |
Net Income | | $ | (189,250 | ) | $ | (155,776 | ) |
Adjustments to reconcile net income (loss) to net cash provided by (used by) operating activities: | | | | | |
| | | | | |
Depreciation and amortization | | 15,795 | | 16,908 | |
(Increase) decrease in accounts receivable | | 494 | | (45,348 | ) |
(Increase) decrease in prepaid expense | | 42,396 | | (53,348 | ) |
(Increase) decrease in other current assets | | (15,542 | ) | (31,382 | ) |
Increase (decrease) in accounts payable | | (92,255 | ) | 50,259 | |
Increase (decrease) in client payroll tax liability | | 172,602 | | 30,893 | |
Deferred revenue on payrolls | | 40,174 | | 9,641 | |
Increase (decrease) in other assets | | | | (1,955 | ) |
Adjustments to consulting expense on return of stock | | | | 75,000 | |
Checks Drawn on uncollected payrolls | | (9,123 | ) | 34,336 | |
Total Adjustments | | 154,541 | | 85,004 | |
Net cash provided by (used in) operating activities | | (34,709 | ) | (70,772 | ) |
Cash flows from investing activities | | | | | |
| | | | | |
Payments for the purchase of property | | 0 | | 0 | |
Net cash provided by (used in) investing activities | | 0 | | 0 | |
Cash flows from financing activities | | | | | |
Net borrowing under line of credit | | 7,448 | | (3,886 | ) |
Net borrowing on notes payable | | 0 | | 61,473 | |
Principal payments on short-term debt | | (20,973 | ) | (2,310 | ) |
Due to shareholders/officers | | (174 | ) | (2,995 | ) |
Net cash provided by (used in) financing activities | | (13,699 | ) | 52,282 | |
Net increase (decrease) in cash and cash equivalents | | 14,953 | | (18,490 | ) |
| | | | | |
Cash and cash equivalents at beginning of year | | 19,845 | | 30,868 | |
| | | | | |
Cash and Cash equivalents at end of quarter | | $ | 34,798 | | $ | 12,378 | |
The accompanying notes are an integral part of these financial statements
F-6
| | 2004 | | 2003 | |
Supplemental information | | | | | |
Cash Payments for Income Taxes | | $ | — | | | |
| | | | | |
Non Cash Items | | | | | |
Stock for goodwill | | $ | 0 | | $ | 7,240 | |
Stock for Consulting Services | | | | 235,000 | |
Stock returned for non performance of services regarding prepaid marketing | | | | (270,000 | ) |
Stock returned for nonperformance of consulting services | | $ | 0 | | $ | (160,000 | ) |
The Accompanying notes are an integral part of these financial statements
F-7
Notes to Unaudited Consolidated Condensed Interim Financial Statements
June 30, 2004
NOTE 1 – BASIS OF PRESENTATION
The condensed interim financial statements at June 30, 2004 are unaudited, but include all adjustments which the Company considers necessary for a fair presentation.
The accompanying unaudited financial statements are for the interim periods and do not include all disclosures normally provided in annual financial statements, and should be read in conjunction with the Company’s Form 10-KSB for the year ended December 31, 2003. The accompanying unaudited interim financial statements for the current quarter and year to date ended June 30, 2004, are not necessarily indicative of the results which can be expected for the entire year. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company has consolidated the financial statements of its wholly owned subsidiaries, Primary Business Systems, LLC, Primary HR Services LLC and AHJR Inc., dba/Concord Staffing Services in these financial statements. All significant intercompany transactions have been eliminated.
All significant accounting policies as previously disclosed with the annual financial statements for the years ended December 31, 2003 and 2002 remain unchanged.
NOTE 3 – CHANGE IN STOCKHOLDERS’ EQUITY
The statement of changes in stockholders’ equity is reported in these financial statements and discloses the transactions as they were incurred in the three months ended June 30, 2004.
During 2003 the Company issued a total of 1,126,355 restricted shares for prepaid consulting services valued at $108,872 to be rendered over a twelve month period. The consulting expense amortized and reported in the current quarter is $27,218 leaving a current asset of prepaid expense at $18,751 as of June 30, 2004. The Company was required to prepay payroll costs on direct deposit clients during the quarter ended June 30, 2004 of $12,039. The total prepaid expenses for the quarter ended June 30, 2004 is $30,790.
NOTE 4 – RELATED PARTY TRANSACTIONS
Notes Receivable reported as a current asset of $61,549 is due from Consumers Insurance Agency, LLC. The primary member of the LLC is Patrick Matthews who is the majority shareholder in the Company. The notes receivable are made up of revolving cash advances to the LLC and expenses paid on behalf of the LLC by the Company.
These revolving notes receivable were part of the 2002 acquisition of the present operations of the Company and were outstanding prior to the date of acquisition.
F-8
Item 6. EXHIBITS
The following documents are filed as exhibits.
31 | | Certificate under Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer and Chief Financial Officer. |
| | |
32 | | Certificate under Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer and the Chief Financial Officer. |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this amended report to be signed on its behalf by the under signed, there unto dully authorized, this 15th day of December 2004.
Primary Business Systems Inc. | |
| |
/S/ Patrick D Matthews | | |
Patrick D. Matthews | |
President, Chief Executive Officer and Chairman | December 15, 2004 |
And Principal Accounting Officer | |
| | |
(THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY)
F-9
